How Should Investors React To Innophos Holdings, Inc.’s (NASDAQ:IPHS) CEO Pay?

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Kim Mink has been the CEO of Innophos Holdings, Inc. (NASDAQ:IPHS) since 1970. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Innophos Holdings

How Does Kim Mink’s Compensation Compare With Similar Sized Companies?

Our data indicates that Innophos Holdings, Inc. is worth US$522m, and total annual CEO compensation is US$3.4m. (This figure is for the year to December 2018). That’s actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at US$838k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.8m.

It would therefore appear that Innophos Holdings, Inc. pays Kim Mink 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 Innophos Holdings has changed from year to year.

NasdaqGS:IPHS CEO Compensation, May 31st 2019
NasdaqGS:IPHS CEO Compensation, May 31st 2019

Is Innophos Holdings, Inc. Growing?

On average over the last three years, Innophos Holdings, Inc. has shrunk earnings per share by 8.8% each year (measured with a line of best fit). It achieved revenue growth of 3.5% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has Innophos Holdings, Inc. Been A Good Investment?

Given the total loss of 21% over three years, many shareholders in Innophos Holdings, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared the total CEO remuneration paid by Innophos Holdings, Inc., 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.

Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if Innophos Holdings insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.