In 2016 Matthijs Glastra was appointed CEO of Novanta Inc. (NASDAQ:NOVT). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Matthijs Glastra's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Novanta Inc. has a market cap of US$3.1b, and reported total annual CEO compensation of US$4.0m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$581k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.
That means Matthijs Glastra receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Novanta has changed from year to year.
Is Novanta Inc. Growing?
Over the last three years Novanta Inc. has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). It achieved revenue growth of 2.9% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has Novanta Inc. Been A Good Investment?
Most shareholders would probably be pleased with Novanta Inc. for providing a total return of 309% over three years. 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.
Matthijs Glastra is paid around the same as most CEOs of similar size companies.
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Indeed, many might consider the pay rather modest, given the solid company performance! So you may want to check if insiders are buying Novanta shares with their own money (free access).
Important note: Novanta 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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