How Is Neogen's (NASDAQ:NEOG) CEO Compensated?

This article will reflect on the compensation paid to John Adent who has served as CEO of Neogen Corporation (NASDAQ:NEOG) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Neogen

Comparing Neogen Corporation's CEO Compensation With the industry

According to our data, Neogen Corporation has a market capitalization of US$4.5b, and paid its CEO total annual compensation worth US$2.1m over the year to May 2020. We note that's an increase of 8.2% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$389k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.2m. This suggests that John Adent is paid below the industry median. Moreover, John Adent also holds US$1.3m worth of Neogen stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 21% of total compensation represents salary, while the remainder of 79% is other remuneration. In Neogen's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Neogen Corporation's Growth

Neogen Corporation has seen its earnings per share (EPS) increase by 3.9% a year over the past three years. It achieved revenue growth of 4.0% over the last year.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Neogen Corporation Been A Good Investment?

Boasting a total shareholder return of 42% over three years, Neogen Corporation 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.

To Conclude...

As we noted earlier, Neogen pays its CEO lower than the norm for similar-sized companies belonging to the same industry. On the other hand, shareholder returns have been have been very pleasing, over the last three years, and that should put a smile on the faces of investors. So, considering these tasty returns, CEO compensation seems quite appropriate.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Neogen that investors should be aware of in a dynamic business environment.

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.

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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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