In 2016 Jordi Ferre was appointed CEO of AgroFresh Solutions, Inc. (NASDAQ:AGFS). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Jordi Ferre’s Compensation Compare With Similar Sized Companies?
According to our data, AgroFresh Solutions, Inc. has a market capitalization of US$135m, and paid its CEO total annual compensation worth US$2.0m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$556k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$523k.
It would therefore appear that AgroFresh Solutions, Inc. pays Jordi Ferre 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 AgroFresh Solutions has changed from year to year.
Is AgroFresh Solutions, Inc. Growing?
Over the last three years AgroFresh Solutions, Inc. has grown its earnings per share (EPS) by an average of 48% per year (using a line of best fit). In the last year, its revenue is down 9.6%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has AgroFresh Solutions, Inc. Been A Good Investment?
Given the total loss of 5.7% over three years, many shareholders in AgroFresh Solutions, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at AgroFresh Solutions, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling AgroFresh Solutions (free visualization of insider trades).
Important note: AgroFresh Solutions may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.