Key Insights

• Lumentum Holdings will host its Annual General Meeting on 17th of November
• Salary of US$980.8k is part of CEO Alan Lowe's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, Lumentum Holdings' EPS fell by 73% and over the past three years, the total loss to shareholders 52%

The results at Lumentum Holdings Inc. (NASDAQ:LITE) have been quite disappointing recently and CEO Alan Lowe bears some responsibility for this. At the upcoming AGM on 17th of November, 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Lumentum Holdings

How Does Total Compensation For Alan Lowe Compare With Other Companies In The Industry?

At the time of writing, our data shows that Lumentum Holdings Inc. has a market capitalization of US$2.6b, and reported total annual CEO compensation of US$14m for the year to July 2023. That's a notable increase of 29% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$981k.

In comparison with other companies in the American Communications industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$14m. From this we gather that Alan Lowe is paid around the median for CEOs in the industry. Moreover, Alan Lowe also holds US$3.5m worth of Lumentum Holdings 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 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. Lumentum Holdings 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 Lumentum Holdings Inc.'s Growth Numbers

Lumentum Holdings Inc. has reduced its earnings per share by 73% a year over the last three years. In the last year, its revenue is down 11%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lumentum Holdings Inc. Been A Good Investment?

The return of -52% over three years would not have pleased Lumentum Holdings Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Lumentum Holdings 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.