It would be hard to discount the role that CEO Oakleigh Thorne has played in delivering the impressive results at Gogo Inc. (NASDAQ:GOGO) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 27 May 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.
Comparing Gogo Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Gogo Inc. has a market capitalization of US$1.3b, and reported total annual CEO compensation of US$3.1m for the year to December 2020. That's a notable increase of 17% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$563k.
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$3.3m. So it looks like Gogo compensates Oakleigh Thorne in line with the median for the industry. Moreover, Oakleigh Thorne also holds US$6.6m worth of Gogo stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 26% of total compensation represents salary, while the remainder of 74% is other remuneration. In Gogo's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader 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 Gogo Inc.'s Growth Numbers
Gogo Inc.'s earnings per share (EPS) grew 32% per year over the last three years. In the last year, its revenue is up 51%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Gogo Inc. Been A Good Investment?
Most shareholders would probably be pleased with Gogo Inc. for providing a total return of 149% over three years. 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.
Seeing that company performance has been quite good recently, some shareholders may feel that CEO compensation may not be the biggest focus in the upcoming AGM. In saying that, some shareholders may feel that the more important issues to be addressed may be how the management plans to steer the company towards sustainable profitability in the future.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Gogo (1 shouldn't be ignored!) that you should be aware of before investing here.
Important note: Gogo 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.