Should You Worry About Plexus Corp.'s (NASDAQ:PLXS) CEO Pay?

September 09, 2019

Todd Kelsey became the CEO of Plexus Corp. (NASDAQ:PLXS) in 2016. 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Plexus

How Does Todd Kelsey's Compensation Compare With Similar Sized Companies?

Our data indicates that Plexus Corp. is worth US$1.8b, and total annual CEO compensation was reported as US$6.7m for the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$915k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.1m.

It would therefore appear that Plexus Corp. pays Todd Kelsey more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Plexus has changed from year to year.

NasdaqGS:PLXS CEO Compensation, September 10th 2019

Is Plexus Corp. Growing?

On average over the last three years, Plexus Corp. has grown earnings per share (EPS) by 9.1% each year (using a line of best fit). It achieved revenue growth of 13% over the last year.

I think the revenue growth is good. And, while modest, the earnings per share growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential.

Has Plexus Corp. Been A Good Investment?

Most shareholders would probably be pleased with Plexus Corp. for providing a total return of 34% 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...

We compared the total CEO remuneration paid by Plexus Corp., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Plexus.

Important note: Plexus 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.

mitchell_lawler

A landmark settlement is meant to punish Meta (META). If the 1998 tobacco deal is any guide, it might protect it.

108

zoe_vi5fn16h

Any moat with an opt-out clause for your competitors is just a fence around your own garden.

connor_iwn1g16h

Worth looking at what previous legal action actually did to Meta rather than reaching for tobacco. The FTC's record five billion dollar privacy fine in 2019 was met with the stock rising, because it came in below fears and removed an open question. GDPR was designed to constrain large platforms and increased their share of the European ad market, because compliance cost fell hardest on small intermediaries. The FTC's antitrust case, the one that could genuinely have broken the company up, was decided in Meta's favour last November. The only thing that ever meaningfully hurt the business was Apple changing a tracking default, and Meta out-spent that too, while the ad-tech firms that could not afford to rebuild disappeared. The pattern is not that Meta survives regulation. It is that regulation keeps costing its smaller competitors more.