In 2010 Thomas Fallon was appointed CEO of Infinera Corporation (NASDAQ:INFN). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. 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 Thomas Fallon’s Compensation Compare With Similar Sized Companies?
According to our data, Infinera Corporation has a market capitalization of US$642m, and pays its CEO total annual compensation worth US$4.9m. (This figure is for the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$630k. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO compensation was US$2.4m.
It would therefore appear that Infinera Corporation pays Thomas Fallon more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Infinera has changed over time.
Is Infinera Corporation Growing?
Infinera Corporation has reduced its earnings per share by an average of 96% a year, over the last three years. Its revenue is up 11% over last year.
Unfortunately, earnings per share have trended lower over the last three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has Infinera Corporation Been A Good Investment?
Since shareholders would have lost about 80% over three years, some Infinera Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared total CEO remuneration at Infinera Corporation with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Infinera.
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.