Key Insights

• Pactiv Evergreen to hold its Annual General Meeting on 5th of June
• CEO Mike King's total compensation includes salary of US$1.28m
• Total compensation is 166% above industry average
• Pactiv Evergreen's EPS declined by 13% over the past three years while total shareholder loss over the past three years was 9.9%

Pactiv Evergreen Inc. (NASDAQ:PTVE) has not performed well recently and CEO Mike King will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 5th of June. 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 Pactiv Evergreen Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Pactiv Evergreen Inc. has a market capitalization of US$2.2b, and reported total annual CEO compensation of US$11m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.

For comparison, other companies in the American Packaging industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$4.0m. Accordingly, our analysis reveals that Pactiv Evergreen Inc. pays Mike King north of the industry median. Moreover, Mike King also holds US$4.4m worth of Pactiv Evergreen stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. Pactiv Evergreen pays a modest slice of remuneration through salary, as compared 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 Pactiv Evergreen Inc.'s Growth Numbers

Over the last three years, Pactiv Evergreen Inc. has shrunk its earnings per share by 13% per year. It saw its revenue drop 13% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Pactiv Evergreen Inc. Been A Good Investment?

With a three year total loss of 9.9% for the shareholders, Pactiv Evergreen Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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 1 warning sign for Pactiv Evergreen that investors should think about before committing capital to this stock.

Important note: Pactiv Evergreen 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.