Stock Analysis

Shareholders Will Likely Find Cognex Corporation's (NASDAQ:CGNX) CEO Compensation Acceptable

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The performance at Cognex Corporation (NASDAQ:CGNX) has been rather lacklustre of late and shareholders may be wondering what CEO Rob Willett is planning to do about this. At the next AGM coming up on 05 May 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

View our latest analysis for Cognex

How Does Total Compensation For Rob Willett Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cognex Corporation has a market capitalization of US$16b, and reported total annual CEO compensation of US$3.5m for the year to December 2020. That's a notable decrease of 8.9% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$173k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. Accordingly, Cognex pays its CEO under the industry median.

Component20202019Proportion (2020)
Salary US$173k US$376k 5%
Other US$3.3m US$3.5m 95%
Total CompensationUS$3.5m US$3.8m100%

On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Cognex paid Rob Willett a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NasdaqGS:CGNX CEO Compensation April 29th 2021

A Look at Cognex Corporation's Growth Numbers

Earnings per share at Cognex Corporation are much the same as they were three years ago, albeit slightly lower. It achieved revenue growth of 12% over the last year.

The lack of EPS growth is certainly uninspiring. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Cognex Corporation Been A Good Investment?

Boasting a total shareholder return of 103% over three years, Cognex Corporation has done well by shareholders. 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...

Cognex prefers rewarding its CEO through non-salary benefits. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Cognex that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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