We Think Some Shareholders May Hesitate To Increase Abbott Laboratories' (NYSE:ABT) CEO Compensation
Key Insights
Abbott Laboratories to hold its Annual General Meeting on 26th of April
Total pay for CEO Robert Ford includes US$1.50m salary
Total compensation is 68% above industry average
Over the past three years, Abbott Laboratories' EPS grew by 0.3% and over the past three years, the total loss to shareholders 8.2%
In the past three years, the share price of Abbott Laboratories (NYSE:ABT) has struggled to generate growth for its shareholders. 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 26th of April. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Abbott Laboratories
Comparing Abbott Laboratories' CEO Compensation With The Industry
At the time of writing, our data shows that Abbott Laboratories has a market capitalization of US$186b, and reported total annual CEO compensation of US$23m for the year to December 2023. That's just a smallish increase of 7.1% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.
On comparing similar companies in the American Medical Equipment industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$14m. Accordingly, our analysis reveals that Abbott Laboratories pays Robert Ford north of the industry median. Moreover, Robert Ford also holds US$45m worth of Abbott Laboratories 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$20m | 94% |
Total Compensation | US$23m | US$22m | 100% |
Speaking on an industry level, nearly 29% of total compensation represents salary, while the remainder of 71% is other remuneration. In Abbott Laboratories' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader 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 Abbott Laboratories' Growth Numbers
Over the last three years, Abbott Laboratories has not seen its earnings per share change much, though there is a slight positive movement. In the last year, its revenue is down 2.8%.
We would prefer it if there was revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Abbott Laboratories Been A Good Investment?
Given the total shareholder loss of 8.2% over three years, many shareholders in Abbott Laboratories are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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 compensation is one thing, but it is also interesting to check if the CEO is buying or selling Abbott Laboratories (free visualization of insider trades).
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.
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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.
