Billy Cyr became the CEO of Freshpet, Inc. (NASDAQ:FRPT) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Freshpet.
Comparing Freshpet, Inc.'s CEO Compensation With the industry
Our data indicates that Freshpet, Inc. has a market capitalization of US$4.8b, and total annual CEO compensation was reported as US$1.2m for the year to December 2019. That's a slightly lower by 4.0% over the previous year. Notably, the salary which is US$600.0k, represents most of the total compensation being paid.
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$4.0m. That is to say, Billy Cyr is paid under the industry median. What's more, Billy Cyr holds US$53m 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 24% of total compensation represents salary and 76% is other remuneration. According to our research, Freshpet has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Freshpet, Inc.'s Growth Numbers
Freshpet, Inc.'s earnings per share (EPS) grew 37% per year over the last three years. Its revenue is up 29% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Freshpet, Inc. Been A Good Investment?
Boasting a total shareholder return of 655% over three years, Freshpet, 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.
As we touched on above, Freshpet, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think Billy deserves a raise!
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 Freshpet you should be aware of, and 1 of them is potentially serious.
Important note: Freshpet 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. 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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