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How Should Investors React To Calavo Growers, Inc.’s (NASDAQ:CVGW) CEO Pay?

In 1999 Lee Cole was appointed CEO of Calavo Growers, Inc. (NASDAQ:CVGW). 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Calavo Growers

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How Does Lee Cole’s Compensation Compare With Similar Sized Companies?

Our data indicates that Calavo Growers, Inc. is worth US$1.3b, and total annual CEO compensation is US$1.7m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$663k. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO compensation was US$3.6m.

A first glance this seems like a real positive for shareholders, since Lee Cole is paid less than the average 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 Calavo Growers has changed over time.

NasdaqGS:CVGW CEO Compensation January 16th 19
NasdaqGS:CVGW CEO Compensation January 16th 19

Is Calavo Growers, Inc. Growing?

Over the last three years Calavo Growers, Inc. has grown its earnings per share (EPS) by an average of 9.9% per year (using a line of best fit). In the last year, its revenue is up 1.2%.

I would argue that the improvement in revenue isn’t particularly impressive, but the modest improvement in EPS is good. Considering these factors I’d say performance has been pretty decent, though not amazing.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Calavo Growers, Inc. Been A Good Investment?

Boasting a total shareholder return of 59% over three years, Calavo Growers, 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.

In Summary…

It looks like Calavo Growers, Inc. pays its CEO less than similar sized companies.

It’s well worth noting that while Lee Cole 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Calavo Growers.

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings 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 editorial-team@simplywallst.com.

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