Yahoo Finance We Think Some Shareholders May Hesitate To Increase Philip Morris International Inc.'s (NYSE:PM) CEO Compensation
Key Insights
Philip Morris International's Annual General Meeting to take place on 8th of May
Salary of US$1.65m is part of CEO Jacek Olczak's total remuneration
Total compensation is 345% above industry average
Over the past three years, Philip Morris International's EPS fell by 2.7% and over the past three years, the total shareholder return was 18%
Despite Philip Morris International Inc.'s (NYSE:PM) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 8th of May. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
View our latest analysis for Philip Morris International
How Does Total Compensation For Jacek Olczak Compare With Other Companies In The Industry?
Our data indicates that Philip Morris International Inc. has a market capitalization of US$148b, and total annual CEO compensation was reported as US$25m for the year to December 2023. We note that's an increase of 62% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.6m.
For comparison, other companies in the the US Tobacco industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$5.7m. Accordingly, our analysis reveals that Philip Morris International Inc. pays Jacek Olczak north of the industry median. What's more, Jacek Olczak holds US$31m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.6m | US$1.5m | 6% |
Other | US$24m | US$14m | 94% |
Total Compensation | US$25m | US$16m | 100% |
On an industry level, roughly 71% of total compensation represents salary and 29% is other remuneration. Philip Morris International sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Philip Morris International Inc.'s Growth Numbers
Philip Morris International Inc. has reduced its earnings per share by 2.7% a year over the last three years. It achieved revenue growth of 12% over the last year.
Its a bit disappointing to see that the company has failed to grow its EPS. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Philip Morris International Inc. Been A Good Investment?
Philip Morris International Inc. has generated a total shareholder return of 18% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Philip Morris International (1 is concerning!) that you should be aware of before investing here.
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.
