John Adent has been the CEO of Neogen Corporation (NASDAQ:NEOG) since 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. 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.
How Does John Adent's Compensation Compare With Similar Sized Companies?
According to our data, Neogen Corporation has a market capitalization of US$3.4b, and paid its CEO total annual compensation worth US$2.0m over the year to May 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$450k. 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$5.8m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Neogen. Talking in terms of the sector, salary represented approximately 23% of total compensation out of all the companies we analysed, while other remuneration made up 77% of the pie. Neogen is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business. You can see a visual representation of the CEO compensation at Neogen, below.
Is Neogen Corporation Growing?
Neogen Corporation has seen earnings per share (EPS) move positively by an average of 9.6% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 1.5%.
I would argue that the improvement in revenue isn't particularly impressive, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.
Has Neogen Corporation Been A Good Investment?
Most shareholders would probably be pleased with Neogen Corporation for providing a total return of 37% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
It appears that Neogen Corporation remunerates its CEO below most similar sized companies.
John Adent receives relatively low remuneration compared to similar sized companies. And the returns to shareholders were great, over the last few years. Although we could see higher growth, we'd argue the remuneration is modest, based on these observations. On another note, we've spotted 1 warning sign for Neogen that investors should look into moving forward.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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