Is Green Plains Inc. (NASDAQ:GPRE) Overpaying Its CEO?

In 2009 Todd Becker was appointed CEO of Green Plains Inc. (NASDAQ:GPRE). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Green Plains

How Does Todd Becker’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Green Plains Inc. has a market cap of US$556m, and reported total annual CEO compensation of US$4.6m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$671k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.7m.

Thus we can conclude that Todd Becker receives more in total compensation than the median of a group of companies in the same market, and of similar size to Green Plains Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Green Plains has changed over time.

NasdaqGS:GPRE CEO Compensation, January 1st 2020
NasdaqGS:GPRE CEO Compensation, January 1st 2020

Is Green Plains Inc. Growing?

On average over the last three years, Green Plains Inc. has shrunk earnings per share by 58% each year (measured with a line of best fit). Its revenue is down 5.3% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Green Plains Inc. Been A Good Investment?

Given the total loss of 41% over three years, many shareholders in Green Plains Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared total CEO remuneration at Green Plains Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Green Plains (free visualization of insider trades).

If you want to buy a stock that is better than Green Plains, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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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