Key Insights

• Aaron's Company will host its Annual General Meeting on 15th of May
• Total pay for CEO Douglas Lindsay includes US$850.0k salary
• The overall pay is 91% above the industry average
• Aaron's Company's EPS declined by 97% over the past three years while total shareholder loss over the past three years was 72%

The results at The Aaron's Company, Inc. (NYSE:AAN) have been quite disappointing recently and CEO Douglas Lindsay bears some responsibility for this. At the upcoming AGM on 15th of May, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Comparing The Aaron's Company, Inc.'s CEO Compensation With The Industry

Our data indicates that The Aaron's Company, Inc. has a market capitalization of US$223m, and total annual CEO compensation was reported as US$5.8m for the year to December 2023. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$850k.

In comparison with other companies in the American Specialty Retail industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$3.0m. This suggests that Douglas Lindsay is paid more than the median for the industry. What's more, Douglas Lindsay holds US$2.1m worth of shares in the company in their own name.

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. Aaron's Company 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.

The Aaron's Company, Inc.'s Growth

Over the last three years, The Aaron's Company, Inc. has shrunk its earnings per share by 97% per year. In the last year, its revenue is down 11%.

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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The Aaron's Company, Inc. Been A Good Investment?

Few The Aaron's Company, Inc. shareholders would feel satisfied with the return of -72% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Aaron's Company that investors should think about before committing capital to this stock.

Important note: Aaron's Company 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.