Yahoo Finance Increases to United Parcel Service, Inc.'s (NYSE:UPS) CEO Compensation Might Cool off for now
Key Insights
United Parcel Service to hold its Annual General Meeting on 2nd of May
CEO Carol Tome's total compensation includes salary of US$1.51m
The total compensation is 214% higher than the average for the industry
United Parcel Service's EPS grew by 5.3% over the past three years while total shareholder loss over the past three years was 20%
Shareholders of United Parcel Service, Inc. (NYSE:UPS) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 2nd of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
See our latest analysis for United Parcel Service
How Does Total Compensation For Carol Tome Compare With Other Companies In The Industry?
According to our data, United Parcel Service, Inc. has a market capitalization of US$126b, and paid its CEO total annual compensation worth US$23m over the year to December 2023. Notably, that's an increase of 23% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.5m.
For comparison, other companies in the American Logistics industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$7.5m. Accordingly, our analysis reveals that United Parcel Service, Inc. pays Carol Tome north of the industry median. Moreover, Carol Tome also holds US$24m worth of United Parcel Service stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.5m | US$1.5m | 6% |
Other | US$22m | US$17m | 94% |
Total Compensation | US$23m | US$19m | 100% |
On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. It's interesting to note that United Parcel Service allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
United Parcel Service, Inc.'s Growth
United Parcel Service, Inc.'s earnings per share (EPS) grew 5.3% per year over the last three years. In the last year, its revenue is down 9.2%.
We generally like to see a little revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has United Parcel Service, Inc. Been A Good Investment?
Given the total shareholder loss of 20% over three years, many shareholders in United Parcel Service, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for United Parcel Service (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
