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Dolph Baker has been the CEO of Cal-Maine Foods, Inc. (NASDAQ:CALM) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Cal-Maine Foods pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Cal-Maine Foods, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Cal-Maine Foods, Inc. has a market capitalization of US$1.8b, and reported total annual CEO compensation of US$1.2m for the year to May 2020. That's a slight decrease of 3.6% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$424k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$2.5m. That is to say, Dolph Baker is paid under the industry median. What's more, Dolph Baker holds US$20m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 25% of total compensation represents salary, while the remainder of 75% is other remuneration. Cal-Maine Foods is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Cal-Maine Foods, Inc.'s Growth
Over the last three years, Cal-Maine Foods, Inc. has shrunk its earnings per share by 8.3% per year. In the last year, its revenue is up 11%.
Few shareholders would be pleased to read that EPS have declined. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Cal-Maine Foods, Inc. Been A Good Investment?
With a three year total loss of 15% for the shareholders, Cal-Maine Foods, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Cal-Maine Foods, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. It's tough to say that Dolph is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
Shareholders may want to check for free if Cal-Maine Foods insiders are buying or selling shares.
Important note: Cal-Maine Foods 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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