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How Should Investors React To Catalent's (NYSE:CTLT) CEO Pay?

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John Chiminski has been the CEO of Catalent, Inc. (NYSE:CTLT) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Catalent pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Catalent

How Does Total Compensation For John Chiminski Compare With Other Companies In The Industry?

According to our data, Catalent, Inc. has a market capitalization of US$16b, and paid its CEO total annual compensation worth US$9.1m over the year to June 2020. That's just a smallish increase of 7.2% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$964k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$16m. Accordingly, Catalent pays its CEO under the industry median. What's more, John Chiminski holds US$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$964k

US$1.0m

11%

Other

US$8.2m

US$7.5m

89%

Total Compensation

US$9.1m

US$8.5m

100%

Speaking on an industry level, nearly 25% of total compensation represents salary, while the remainder of 75% is other remuneration. Catalent sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Catalent, Inc.'s Growth Numbers

Over the past three years, Catalent, Inc. has seen its earnings per share (EPS) grow by 23% per year. It achieved revenue growth of 24% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Catalent, Inc. Been A Good Investment?

Boasting a total shareholder return of 140% over three years, Catalent, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we noted earlier, Catalent pays its CEO lower than the norm for similar-sized companies belonging to the same industry. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think John deserves a raise!

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Catalent (1 is a bit concerning!) that you should be aware of before investing here.

Switching gears from Catalent, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.