Increases to CEO Compensation Might Be Put On Hold For Now at NeoPhotonics Corporation (NYSE:NPTN)

Under the guidance of CEO Tim Jenks, NeoPhotonics Corporation (NYSE:NPTN) has performed reasonably well recently. As shareholders go into the upcoming AGM on 01 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for NeoPhotonics

How Does Total Compensation For Tim Jenks Compare With Other Companies In The Industry?

According to our data, NeoPhotonics Corporation has a market capitalization of US$525m, and paid its CEO total annual compensation worth US$2.2m over the year to December 2020. Notably, that's an increase of 28% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$537k.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.4m. Hence, we can conclude that Tim Jenks is remunerated higher than the industry median. Furthermore, Tim Jenks directly owns US$5.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$537k	US$491k	24%
Other	US$1.7m	US$1.3m	76%
Total Compensation	US$2.2m	US$1.8m	100%

Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. NeoPhotonics is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NeoPhotonics Corporation's Growth

NeoPhotonics Corporation has seen its earnings per share (EPS) increase by 79% a year over the past three years. It saw its revenue drop 11% over the last year.

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. 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 NeoPhotonics Corporation Been A Good Investment?

Most shareholders would probably be pleased with NeoPhotonics Corporation for providing a total return of 55% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for NeoPhotonics that investors should think about before committing capital to this stock.

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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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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