We Take A Look At Why Vital Farms, Inc.'s (NASDAQ:VITL) CEO Compensation Is Well Earned

Key Insights

• Vital Farms will host its Annual General Meeting on 12th of June
• Salary of US$686.5k is part of CEO Russell Diez-Canseco's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, Vital Farms' EPS grew by 40% and over the past three years, the total shareholder return was 94%

It would be hard to discount the role that CEO Russell Diez-Canseco has played in delivering the impressive results at Vital Farms, Inc. (NASDAQ:VITL) recently. Coming up to the next AGM on 12th of June, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for Vital Farms

Comparing Vital Farms, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Vital Farms, Inc. has a market capitalization of US$1.8b, and reported total annual CEO compensation of US$3.2m for the year to December 2023. That's a notable increase of 46% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$687k.

On examining similar-sized companies in the American Food 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$4.4m. So it looks like Vital Farms compensates Russell Diez-Canseco in line with the median for the industry. What's more, Russell Diez-Canseco holds US$13m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$687k	US$625k	22%
Other	US$2.5m	US$1.5m	78%
Total Compensation	US$3.2m	US$2.2m	100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. It's interesting to note that Vital Farms pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Vital Farms, Inc.'s Growth Numbers

Vital Farms, Inc. has seen its earnings per share (EPS) increase by 40% a year over the past three years. It achieved revenue growth of 23% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Vital Farms, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Vital Farms, Inc. for providing a total return of 94% over three years. 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...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Vital Farms that investors should think about before committing capital to this stock.

Important note: Vital Farms 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.