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We Think The Compensation For Novanta Inc.'s (NASDAQ:NOVT) CEO Looks About Right

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·3 min read
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CEO Matthijs Glastra has done a decent job of delivering relatively good performance at Novanta Inc. (NASDAQ:NOVT) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 13 May 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

View our latest analysis for Novanta

How Does Total Compensation For Matthijs Glastra Compare With Other Companies In The Industry?

According to our data, Novanta Inc. has a market capitalization of US$4.5b, and paid its CEO total annual compensation worth US$4.9m over the year to December 2020. Notably, that's an increase of 21% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$625k.

In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$5.6m. So it looks like Novanta compensates Matthijs Glastra in line with the median for the industry. What's more, Matthijs Glastra holds US$15m 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$625k

US$640k

13%

Other

US$4.3m

US$3.4m

87%

Total Compensation

US$4.9m

US$4.1m

100%

On an industry level, roughly 27% of total compensation represents salary and 73% is other remuneration. It's interesting to note that Novanta allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

Novanta Inc.'s Growth

Novanta Inc.'s earnings per share (EPS) grew 3.5% per year over the last three years. It saw its revenue drop 5.7% over the last year.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Novanta Inc. Been A Good Investment?

Most shareholders would probably be pleased with Novanta Inc. for providing a total return of 100% 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.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Novanta that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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 (at) simplywallst.com.