How Should Investors React To Oil-Dri Corporation of America’s (NYSE:ODC) CEO Pay?

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Daniel Jaffee became the CEO of Oil-Dri Corporation of America (NYSE:ODC) in 1997. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Oil-Dri of America

How Does Daniel Jaffee’s Compensation Compare With Similar Sized Companies?

According to our data, Oil-Dri Corporation of America has a market capitalization of US$195m, and pays its CEO total annual compensation worth US$1.3m. (This number is for the twelve months until 2018). While we always look at total compensation first, we note that the salary component is less, at US$700k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO compensation was US$950k.

It would therefore appear that Oil-Dri Corporation of America pays Daniel Jaffee more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Oil-Dri of America has changed from year to year.

NYSE:ODC CEO Compensation February 6th 19
NYSE:ODC CEO Compensation February 6th 19

Is Oil-Dri Corporation of America Growing?

On average over the last three years, Oil-Dri Corporation of America has shrunk earnings per share by 28% each year (measured with a line of best fit). It achieved revenue growth of 1.2% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Oil-Dri Corporation of America Been A Good Investment?

Given the total loss of 23% over three years, many shareholders in Oil-Dri Corporation of America are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared the total CEO remuneration paid by Oil-Dri Corporation of America, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! Shareholders may want to check for free if Oil-Dri of America insiders are buying or selling shares.

If you want to buy a stock that is better than Oil-Dri of America, this free list of high return, low debt companies is a great place to look.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.