In 1997 Daniel Jaffee was appointed CEO of Oil-Dri Corporation of America (NYSE:ODC). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Daniel Jaffee's Compensation Compare With Similar Sized Companies?
According to our data, Oil-Dri Corporation of America has a market capitalization of US$266m, and paid its CEO total annual compensation worth US$6.3m over the year to July 2019. That's a notable increase of 376% on last year. While we always look at total compensation first, we note that the salary component is less, at US$721k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.2m.
It would therefore appear that Oil-Dri Corporation of America pays Daniel Jaffee 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Oil-Dri Corporation of America, below.
Is Oil-Dri Corporation of America Growing?
Over the last three years Oil-Dri Corporation of America has shrunk its earnings per share by an average of 9.7% per year (measured with a line of best fit). Its revenue is up 4.1% over last year.
Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Oil-Dri Corporation of America Been A Good Investment?
Given the total loss of 4.4% over three years, many shareholders in Oil-Dri Corporation of America are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared total CEO remuneration at Oil-Dri Corporation of America with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Just as bad, share price gains for investors have failed to materialize, over the same period. And we'd be remiss not to note that the CEO remuneration has increased on last year. Some might well form the view that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Oil-Dri Corporation of America shares (free trial).
Important note: Oil-Dri Corporation of America may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.