This article will reflect on the compensation paid to Valentin Gapontsev who has served as CEO of IPG Photonics Corporation (NASDAQ:IPGP) since 1990. This analysis will also assess whether IPG Photonics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Valentin Gapontsev Compare With Other Companies In The Industry?
At the time of writing, our data shows that IPG Photonics Corporation has a market capitalization of US$8.2b, and reported total annual CEO compensation of US$1.3m for the year to December 2019. Notably, that's a decrease of 23% over the year before. In particular, the salary of US$930.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$6.2m. This suggests that Valentin Gapontsev is paid below the industry median. Furthermore, Valentin Gapontsev directly owns US$59m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 36% of total compensation out of all the companies we analyzed, while other remuneration made up 64% of the pie. IPG Photonics pays out 74% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at IPG Photonics Corporation's Growth Numbers
Over the last three years, IPG Photonics Corporation has shrunk its earnings per share by 27% per year. In the last year, its revenue is down 13%.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has IPG Photonics Corporation Been A Good Investment?
Given the total shareholder loss of 6.5% over three years, many shareholders in IPG Photonics Corporation are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, IPG Photonics Corporation is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for IPG Photonics that investors should be aware of in a dynamic business environment.
Important note: IPG Photonics is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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 email@example.com.