Here's Why Shareholders May Want To Be Cautious With Increasing Haemonetics Corporation's (NYSE:HAE) CEO Pay Packet

In the past three years, the share price of Haemonetics Corporation (NYSE:HAE) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 06 August 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Haemonetics

How Does Total Compensation For Chris Simon Compare With Other Companies In The Industry?

Our data indicates that Haemonetics Corporation has a market capitalization of US$3.1b, and total annual CEO compensation was reported as US$8.6m for the year to April 2021. Notably, that's a decrease of 8.2% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$963k.

In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$5.7m. Hence, we can conclude that Chris Simon is remunerated higher than the industry median. Furthermore, Chris Simon directly owns US$8.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	US$963k	US$937k	11%
Other	US$7.7m	US$8.5m	89%
Total Compensation	US$8.6m	US$9.4m	100%

Talking in terms of the industry, salary represented approximately 22% of total compensation out of all the companies we analyzed, while other remuneration made up 78% of the pie. It's interesting to note that Haemonetics allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Haemonetics Corporation's Growth

Over the past three years, Haemonetics Corporation has seen its earnings per share (EPS) grow by 22% per year. Its revenue is down 12% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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 Haemonetics Corporation Been A Good Investment?

The return of -37% over three years would not have pleased Haemonetics Corporation shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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 3 warning signs for Haemonetics (1 is concerning!) that you should be aware of before investing here.

Switching gears from Haemonetics, 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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