AMC Stock: Adam Aron’s Compensation Comes at a 2,421-to-1 Ratio

Source: Ian Dewar Photography / Shutterstock

Once a stock for the masses, AMC Entertainment (NYSE:AMC) has provided real and meaningful entertainment for retail traders and those involved in meme stock mania over the past two years. Since hitting a high of more than $550 per share in early June 2021, shares of AMC stock have plummeted below $8 per share as of trading today. Today’s more than 5% decline has contributed to a more than 98% total drop from AMC’s peak, in a little more than two years.

Retail investors have found many catalysts and reasons to sell shares of AMC stock over the past two years. Today, investors appear to be focused on a new proxy filing that has come in ahead of the company’s upcoming shareholder meeting on Nov. 8, 2023. Like most shareholder meetings, investors will be asked to vote on a series of proposals, all of which the company’s Board of Directors is in favor of.

However, one key attribute investors are having a hard time coping with are the payouts and executive compensation listed for key officers, including CEO Adam Aron. In this proxy filing, the company stated the following, which has some investors in a tizzy:

“[F]or 2022 the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 2,421 to 1.”

Let’s dive into what investors may want to make of this news and today’s move in AMC stock.

AMC Stock Sinks as This Meme Stock Loses Its Luster

One of the reasons AMC has not only survived the pandemic but (some would argue) thrived through the turmoil is the group of loyal retail investors who have backed AMC when no one else would.  Certainly, the company’s management team has managed through this period of volatility well. And few can argue that AMC hasn’t taken advantage of surges in its stock price to benefit its loyal consumer base. That’s entirely true. In fact, AMC likely wouldn’t be standing today without its current leadership.

That said, AMC is a company that remains on uneven footing. Its financial picture isn’t great and, while retail investors clearly saved the company once, it’s unclear that they’ll do so again. Student loan payments are resuming, interest rate hikes have hurt affordability for everything from housing to food and there’s just less wiggle room in the budget for many movie aficionados to see the latest blockbuster at their local AMC. That’s unlikely to change.

Accordingly, when investors see these kinds of ratios pop up, it’s hard to make a case that AMC is the same company retail investors backed two years ago. This is a company — just like many out there — with a management team that seems to be focused on compensating itself first, then handing out scraps to those at the bottom. For many AMC stock loyalists who have lost almost everything since jumping in near the peak of meme mania, that’s too much to bear right now.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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