Novanta Inc.'s (NASDAQ:NOVT) CEO Compensation Looks Acceptable To Us And Here's Why

By
Simply Wall St
Published
May 07, 2021
NasdaqGS:NOVT

Performance at Novanta Inc. (NASDAQ:NOVT) has been reasonably good and CEO Matthijs Glastra has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 13 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for Novanta

How Does Total Compensation For Matthijs Glastra Compare With Other Companies In The Industry?

According to our data, Novanta Inc. has a market capitalization of US$4.5b, and paid its CEO total annual compensation worth US$4.9m over the year to December 2020. We note that's an increase of 21% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$625k.

On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$5.6m. So it looks like Novanta compensates Matthijs Glastra in line with the median for the industry. Furthermore, Matthijs Glastra directly owns US$15m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$625k US$640k 13%
Other US$4.3m US$3.4m 87%
Total CompensationUS$4.9m US$4.1m100%

Talking in terms of the industry, salary represented approximately 27% of total compensation out of all the companies we analyzed, while other remuneration made up 73% of the pie. Novanta pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NasdaqGS:NOVT CEO Compensation May 7th 2021

Novanta Inc.'s Growth

Over the past three years, Novanta Inc. has seen its earnings per share (EPS) grow by 3.5% per year. In the last year, its revenue is down 5.7%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. 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. 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 Novanta Inc. Been A Good Investment?

Boasting a total shareholder return of 100% over three years, Novanta 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.

In Summary...

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. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Novanta 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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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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