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This article will reflect on the compensation paid to Doug VanOort who has served as CEO of NeoGenomics, Inc. (NASDAQ:NEO) since 2009. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing NeoGenomics, Inc.'s CEO Compensation With the industry
Our data indicates that NeoGenomics, Inc. has a market capitalization of US$4.0b, and total annual CEO compensation was reported as US$3.6m for the year to December 2019. That's a notable increase of 9.0% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$665k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$2.7m. This suggests that Doug VanOort is paid more than the median for the industry. Moreover, Doug VanOort also holds US$85m worth of NeoGenomics 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 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. It's interesting to note that NeoGenomics pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at NeoGenomics, Inc.'s Growth Numbers
NeoGenomics, Inc.'s earnings per share (EPS) grew 115% per year over the last three years. Its revenue is up 36% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 NeoGenomics, Inc. Been A Good Investment?
We think that the total shareholder return of 285%, over three years, would leave most NeoGenomics, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we touched on above, NeoGenomics, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, earnings per share growth and shareholder returns are very impressive over the last three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that Doug's performance creates value for the company.
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. We did our research and spotted 4 warning signs for NeoGenomics that investors should look into moving forward.
Important note: NeoGenomics 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.
This article by Simply Wall St is general in nature. 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.
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