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Valentin Gapontsev has been the CEO of IPG Photonics Corporation (NASDAQ:IPGP) since 1990. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Valentin Gapontsev's Compensation Compare With Similar Sized Companies?
Our data indicates that IPG Photonics Corporation is worth US$8.3b, and total annual CEO compensation is US$1.7m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.9m.
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.
You can see, below, how CEO compensation at IPG Photonics has changed over time.
Is IPG Photonics Corporation Growing?
On average over the last three years, IPG Photonics Corporation has grown earnings per share (EPS) by 18% each year (using a line of best fit). In the last year, its revenue is down -4.6%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has IPG Photonics Corporation Been A Good Investment?
Most shareholders would probably be pleased with IPG Photonics Corporation for providing a total return of 95% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that IPG Photonics Corporation remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Valentin Gapontsev deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling IPG Photonics (free visualization of insider trades).
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.
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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.