Key Insights

• Scholastic's Annual General Meeting to take place on 18th of September
• Total pay for CEO Peter Warwick includes US$1.00m salary
• The total compensation is 56% less than the average for the industry
• Scholastic's three-year loss to shareholders was 2.0% while its EPS grew by 27% over the past three years

Performance at Scholastic Corporation (NASDAQ:SCHL) has been rather uninspiring recently and shareholders may be wondering how CEO Peter Warwick plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 18th of September. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

How Does Total Compensation For Peter Warwick Compare With Other Companies In The Industry?

According to our data, Scholastic Corporation has a market capitalization of US$857m, and paid its CEO total annual compensation worth US$2.0m over the year to May 2024. We note that's a decrease of 38% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

In comparison with other companies in the American Media industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$4.6m. That is to say, Peter Warwick is paid under the industry median. Furthermore, Peter Warwick directly owns US$3.0m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 18% of total compensation out of all the companies we analyzed, while other remuneration made up 82% of the pie. Scholastic pays out 49% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Scholastic Corporation's Growth Numbers

Scholastic Corporation has seen its earnings per share (EPS) increase by 27% a year over the past three years. It saw its revenue drop 6.7% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Scholastic Corporation Been A Good Investment?

Since shareholders would have lost about 2.0% over three years, some Scholastic Corporation investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The lacklustre share price returns is rather divergent to the robust growth in EPS, suggesting that there may be other factors weighing on it apart from fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board's judgement and decision-making is aligned with their expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Scholastic that investors should look into moving forward.

Important note: Scholastic is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.