Should Shareholders Reconsider Quad/Graphics, Inc.'s (NYSE:QUAD) CEO Compensation Package?

Shareholders will probably not be too impressed with the underwhelming results at Quad/Graphics, Inc. (NYSE:QUAD) recently. At the upcoming AGM on 17 May 2021, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Quad/Graphics

Comparing Quad/Graphics, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Quad/Graphics, Inc. has a market capitalization of US$175m, and reported total annual CEO compensation of US$3.4m for the year to December 2020. That's a notable decrease of 46% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$850k.

On examining similar-sized companies in the industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$2.0m. Hence, we can conclude that J. Quadracci is remunerated higher than the industry median. Furthermore, J. Quadracci directly owns US$5.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$850k	US$1.0m	25%
Other	US$2.6m	US$5.4m	75%
Total Compensation	US$3.4m	US$6.4m	100%

Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Our data reveals that Quad/Graphics allocates salary more or less in line with the wider market. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Quad/Graphics, Inc.'s Growth

Quad/Graphics, Inc. has reduced its earnings per share by 107% a year over the last three years. Its revenue is down 26% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Quad/Graphics, Inc. Been A Good Investment?

Few Quad/Graphics, Inc. shareholders would feel satisfied with the return of -80% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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 1 warning sign for Quad/Graphics that investors should look into moving forward.

Switching gears from Quad/Graphics, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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