Should Shareholders Reconsider Align Technology, Inc.'s (NASDAQ:ALGN) CEO Compensation Package?

Key Insights

• Align Technology's Annual General Meeting to take place on 21st of May
• Salary of US$1.40m is part of CEO Joe Hogan's total remuneration
• The overall pay is 73% above the industry average
• Align Technology's EPS declined by 14% over the past three years while total shareholder loss over the past three years was 32%

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Align Technology, Inc. (NASDAQ:ALGN) has not performed well recently and CEO Joe Hogan will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 21st of May. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Align Technology

Comparing Align Technology, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Align Technology, Inc. has a market capitalization of US$14b, and reported total annual CEO compensation of US$27m for the year to December 2024. That's a slight decrease of 5.6% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.4m.

In comparison with other companies in the American Medical Equipment industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$16m. This suggests that Joe Hogan is paid more than the median for the industry. Furthermore, Joe Hogan directly owns US$45m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 25% of total compensation represents salary, while the remainder of 75% is other remuneration. Align Technology sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Align Technology, Inc.'s Growth

Over the last three years, Align Technology, Inc. has shrunk its earnings per share by 14% per year. Its revenue is up 1.6% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Align Technology, Inc. Been A Good Investment?

With a total shareholder return of -32% over three years, Align Technology, Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

Shareholders may want to check for free if Align Technology insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.