Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
In 2010 Dolph Baker was appointed CEO of Cal-Maine Foods, Inc. (NASDAQ:CALM). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Dolph Baker's Compensation Compare With Similar Sized Companies?
According to our data, Cal-Maine Foods, Inc. has a market capitalization of US$2.0b, and pays its CEO total annual compensation worth US$1.3m. (This is based on the year to June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$413k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$3.6m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Cal-Maine Foods has changed from year to year.
Is Cal-Maine Foods, Inc. Growing?
Over the last three years Cal-Maine Foods, Inc. has shrunk its earnings per share by an average of 22% per year (measured with a line of best fit). It achieved revenue growth of 14% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Cal-Maine Foods, Inc. Been A Good Investment?
Given the total loss of 16% over three years, many shareholders in Cal-Maine Foods, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
Cal-Maine Foods, Inc. is currently paying its CEO below what is normal for companies of its size.
Dolph Baker is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cal-Maine Foods (free visualization of insider trades).
Important note: Cal-Maine Foods may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.