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How Is II-VI's (NASDAQ:IIVI) CEO Compensated?

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Simply Wall St
·4 min read
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Chuck Mattera became the CEO of II-VI Incorporated (NASDAQ:IIVI) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for II-VI

Comparing II-VI Incorporated's CEO Compensation With the industry

According to our data, II-VI Incorporated has a market capitalization of US$4.8b, and paid its CEO total annual compensation worth US$11m over the year to June 2020. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$920k.

On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$4.9m. This suggests that Chuck Mattera is paid more than the median for the industry. Furthermore, Chuck Mattera directly owns US$19m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2020

2019

Proportion (2020)

Salary

US$920k

US$686k

9%

Other

US$9.6m

US$10m

91%

Total Compensation

US$11m

US$11m

100%

On an industry level, around 33% of total compensation represents salary and 67% is other remuneration. II-VI pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

II-VI Incorporated's Growth

II-VI Incorporated has reduced its earnings per share by 61% a year over the last three years. In the last year, its revenue is up 75%.

The decrease in EPS could be a concern for some investors. 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. 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 II-VI Incorporated Been A Good Investment?

II-VI Incorporated has not done too badly by shareholders, with a total return of 6.5%, over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we noted earlier, II-VI pays its CEO higher than the norm for similar-sized companies belonging to the same industry. On the other hand, revenues will undoubtedly inspire confidence since they've been growing at a healthy pace recently. Although shareholder returns are also growing during this time, they have not impressed us as much. Importantly, EPS growth is negative, a worrying trend. All things considered, we don't think CEO compensation is unfair, though shareholders will likely want to see an overall improvement in performance before any potential raise.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for II-VI that investors should be aware of in a dynamic business environment.

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.

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@simplywallst.com.