We Think Shareholders May Want To Consider A Review Of Verizon Communications Inc.'s (NYSE:VZ) CEO Compensation Package

Key Insights

• Verizon Communications to hold its Annual General Meeting on 9th of May

• CEO Hans Vestberg's total compensation includes salary of US$1.50m

• Total compensation is 720% above industry average

• Verizon Communications' EPS declined by 16% over the past three years while total shareholder loss over the past three years was 21%

Shareholders will probably not be too impressed with the underwhelming results at Verizon Communications Inc. (NYSE:VZ) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 9th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Verizon Communications

How Does Total Compensation For Hans Vestberg Compare With Other Companies In The Industry?

According to our data, Verizon Communications Inc. has a market capitalization of US$165b, and paid its CEO total annual compensation worth US$24m over the year to December 2023. That's a notable increase of 22% 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 Telecom industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$2.9m. Accordingly, our analysis reveals that Verizon Communications Inc. pays Hans Vestberg north of the industry median. Moreover, Hans Vestberg also holds US$19m worth of Verizon Communications stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. In Verizon Communications' 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 Verizon Communications Inc.'s Growth Numbers

Verizon Communications Inc. has reduced its earnings per share by 16% a year over the last three years. In the last year, its revenue is down 1.6%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Verizon Communications Inc. Been A Good Investment?

With a three year total loss of 21% for the shareholders, Verizon Communications Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 5 warning signs for Verizon Communications that investors should think about before committing capital to this stock.

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.