We Discuss Whether Where Food Comes From, Inc.'s (NASDAQ:WFCF) CEO Is Due For A Pay Rise

The impressive results at Where Food Comes From, Inc. (NASDAQ:WFCF) recently will be great news for shareholders. At the upcoming AGM on 21 May 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. We think the CEO has done a pretty decent job and probably deserves a well-earned pay rise.

Check out our latest analysis for Where Food Comes From

How Does Total Compensation For John Saunders Compare With Other Companies In The Industry?

At the time of writing, our data shows that Where Food Comes From, Inc. has a market capitalization of US$85m, and reported total annual CEO compensation of US$390k for the year to December 2020. That's a modest increase of 5.0% on the prior year. In particular, the salary of US$378.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$708k. This suggests that John Saunders is paid below the industry median. What's more, John Saunders holds US$12m 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$378k	US$360k	97%
Other	US$12k	US$11k	3%
Total Compensation	US$390k	US$371k	100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. Investors will find it interesting that Where Food Comes From pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Where Food Comes From, Inc.'s Growth Numbers

Where Food Comes From, Inc.'s earnings per share (EPS) grew 255% per year over the last three years. In the last year, its revenue changed by just 0.6%.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Where Food Comes From, Inc. Been A Good Investment?

We think that the total shareholder return of 62%, over three years, would leave most Where Food Comes From, Inc. shareholders smiling. 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.

To Conclude...

Where Food Comes From pays its CEO a majority of compensation through a salary. Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Where Food Comes From that investors should look into moving forward.

Important note: Where Food Comes From is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.
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