We Discuss Why Phibro Animal Health Corporation's (NASDAQ:PAHC) CEO Compensation May Be Closely Reviewed

By
Simply Wall St
Published
October 25, 2021
NasdaqGM:PAHC
Source: Shutterstock

Shareholders will probably not be too impressed with the underwhelming results at Phibro Animal Health Corporation (NASDAQ:PAHC) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 01 November 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Phibro Animal Health

Comparing Phibro Animal Health Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Phibro Animal Health Corporation has a market capitalization of US$921m, and reported total annual CEO compensation of US$4.0m for the year to June 2021. That's a notable increase of 32% on last year. Notably, the salary which is US$2.13m, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$2.9m. Hence, we can conclude that Jack Bendheim is remunerated higher than the industry median. What's more, Jack Bendheim holds US$460m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20212020Proportion (2021)
Salary US$2.1m US$2.1m 53%
Other US$1.9m US$899k 47%
Total CompensationUS$4.0m US$3.0m100%

On an industry level, roughly 28% of total compensation represents salary and 72% is other remuneration. According to our research, Phibro Animal Health has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
NasdaqGM:PAHC CEO Compensation October 26th 2021

Phibro Animal Health Corporation's Growth

Over the last three years, Phibro Animal Health Corporation has shrunk its earnings per share by 6.0% per year. Its revenue is up 4.1% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Phibro Animal Health Corporation Been A Good Investment?

With a total shareholder return of -44% over three years, Phibro Animal Health Corporation shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in 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 Phibro Animal Health (2 are concerning!) that you should be aware of before investing here.

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.

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