Chuck Mattera has been the CEO of II-VI Incorporated (NASDAQ:IIVI) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether II-VI pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing II-VI Incorporated's CEO Compensation With the industry
At the time of writing, our data shows that II-VI Incorporated has a market capitalization of US$9.0b, and reported total annual CEO compensation of US$11m for the year to June 2020. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$920k.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$6.8m. Accordingly, our analysis reveals that II-VI Incorporated pays Chuck Mattera north of the industry median. What's more, Chuck Mattera holds US$37m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 33% of total compensation represents salary and 67% is other remuneration. II-VI sets aside a smaller share of compensation for 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.
II-VI Incorporated's Growth
Over the last three years, II-VI Incorporated has shrunk its earnings per share by 69% per year. Its revenue is up 99% over the last year.
The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has II-VI Incorporated Been A Good Investment?
Most shareholders would probably be pleased with II-VI Incorporated for providing a total return of 133% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As previously discussed, Chuck is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But II-VI is growing its revenue, and total shareholder returns have also been pleasing for the last three years. Importantly though, EPS has not been growing over the same stretch. Considering all the factors, we would have to say CEO pay is fair; however, moving forward, it would be nice to see EPS growth from the company as well.
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 II-VI you should be aware of, and 1 of them is potentially serious.
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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