Yahoo Finance Does American Express' (NYSE:AXP) CEO Salary Compare Well With Industry Peers?
This article will reflect on the compensation paid to Steve Squeri who has served as CEO of American Express Company (NYSE:AXP) since 2018. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for American Express
Comparing American Express Company's CEO Compensation With the industry
According to our data, American Express Company has a market capitalization of US$96b, and paid its CEO total annual compensation worth US$24m over the year to December 2019. That's a notable increase of 37% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. Hence, we can conclude that Steve Squeri is remunerated higher than the industry median. Moreover, Steve Squeri also holds US$24m worth of American Express stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$1.5m | US$1.5m | 6% |
Other | US$22m | US$16m | 94% |
Total Compensation | US$24m | US$17m | 100% |
On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. American Express sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
American Express Company's Growth
Over the last three years, American Express Company has shrunk its earnings per share by 7.9% per year. Its revenue is down 18% over the previous year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has American Express Company Been A Good Investment?
With a total shareholder return of 32% over three years, American Express Company shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
As previously discussed, Steve is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. And shareholder returns are decent but not great. So we think more research is needed, but we don't think the CEO is underpaid.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which is significant) in American Express we think you should know about.
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.
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. 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.
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