Here's Why Gevo, Inc.'s (NASDAQ:GEVO) CEO May Deserve A Raise

By
Simply Wall St
Published
June 03, 2021
NasdaqCM:GEVO
Source: Shutterstock

Shareholders will be pleased by the impressive results for Gevo, Inc. (NASDAQ:GEVO) recently and CEO Pat Gruber has played a key role. At the upcoming AGM on 09 June 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. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for Gevo

Comparing Gevo, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Gevo, Inc. has a market capitalization of US$1.5b, and reported total annual CEO compensation of US$1.6m for the year to December 2020. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$467k.

On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$3.0m. This suggests that Pat Gruber is paid below the industry median. Moreover, Pat Gruber also holds US$12m worth of Gevo stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$467k US$500k 30%
Other US$1.1m US$1.1m 70%
Total CompensationUS$1.6m US$1.6m100%

Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. Gevo pays out 30% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NasdaqCM:GEVO CEO Compensation June 4th 2021

A Look at Gevo, Inc.'s Growth Numbers

Gevo, Inc.'s earnings per share (EPS) grew 103% per year over the last three years. It saw its revenue drop 92% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Gevo, Inc. Been A Good Investment?

Boasting a total shareholder return of 124% over three years, Gevo, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for Gevo (1 is potentially serious!) that you should be aware of before investing here.

Switching gears from Gevo, 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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