The impressive results at Clearfield, Inc. (NASDAQ:CLFD) recently will be great news for shareholders. This would be kept in mind at the upcoming AGM on 24 February 2022 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.
Comparing Clearfield, Inc.'s CEO Compensation With the industry
According to our data, Clearfield, Inc. has a market capitalization of US$862m, and paid its CEO total annual compensation worth US$1.5m over the year to September 2021. Notably, that's an increase of 84% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$362k.
On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$3.0m. Accordingly, Clearfield pays its CEO under the industry median. Moreover, Cheri Beranek also holds US$27m worth of Clearfield stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. Clearfield is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Clearfield, Inc.'s Growth Numbers
Over the past three years, Clearfield, Inc. has seen its earnings per share (EPS) grow by 84% per year. It achieved revenue growth of 63% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Clearfield, Inc. Been A Good Investment?
Boasting a total shareholder return of 342% over three years, Clearfield, Inc. 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.
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Clearfield you should be aware of, and 1 of them shouldn't be ignored.
Important note: Clearfield is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.