Alan Lowe became the CEO of Lumentum Holdings Inc. (NASDAQ:LITE) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Alan Lowe's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Lumentum Holdings Inc. has a market cap of US$5.4b, and reported total annual CEO compensation of US$9.3m for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$785k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$7.2m.
So Alan Lowe is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Lumentum Holdings has changed from year to year.
Is Lumentum Holdings Inc. Growing?
Over the last three years Lumentum Holdings Inc. has grown its earnings per share (EPS) by an average of 16% per year (using a line of best fit). In the last year, its revenue is up 31%.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Lumentum Holdings Inc. Been A Good Investment?
Boasting a total shareholder return of 46% over three years, Lumentum Holdings Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Alan Lowe is paid around what is normal for the leaders of comparable size companies.
The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for Lumentum Holdings (1 shouldn't be ignored!) that you should be aware of before investing here.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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