In 2016 Billy Cyr was appointed CEO of Freshpet, Inc. (NASDAQ:FRPT). 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. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Billy Cyr's Compensation Compare With Similar Sized Companies?
Our data indicates that Freshpet, Inc. is worth US$1.5b, and total annual CEO compensation is US$1.1m. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$600k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.6m.
A first glance this seems like a real positive for shareholders, since Billy Cyr is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Freshpet has changed over time.
Is Freshpet, Inc. Growing?
Freshpet, Inc. has reduced its earnings per share by an average of 21% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 27% over the last year.
The reduction in earnings per share, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Shareholders might be interested in this free visualization of analyst forecasts.
Has Freshpet, Inc. Been A Good Investment?
Boasting a total shareholder return of 459% over three years, Freshpet, Inc. has done well by shareholders. 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.
It appears that Freshpet, Inc. remunerates its CEO below most similar sized companies.
It's well worth noting that while Billy Cyr is paid below what is normal at companies of similar size, the returns have been very pleasing, over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. Shareholders may want to check for free if Freshpet insiders are buying or selling shares.
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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