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It's Unlikely That Shareholders Will Increase Cal-Maine Foods, Inc.'s (NASDAQ:CALM) Compensation By Much This Year

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·3-min read
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The underwhelming performance at Cal-Maine Foods, Inc. (NASDAQ:CALM) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 01 October 2021. From our analysis below, we think CEO compensation looks appropriate for now.

Check out our latest analysis for Cal-Maine Foods

Comparing Cal-Maine Foods, Inc.'s CEO Compensation With the industry

Our data indicates that Cal-Maine Foods, Inc. has a market capitalization of US$1.8b, and total annual CEO compensation was reported as US$1.2m for the year to May 2021. That's a slight decrease of 6.8% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$455k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$2.4m. Accordingly, Cal-Maine Foods pays its CEO under the industry median. Furthermore, Dolph Baker directly owns US$20m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2021

2020

Proportion (2021)

Salary

US$455k

US$441k

39%

Other

US$720k

US$820k

61%

Total Compensation

US$1.2m

US$1.3m

100%

Talking in terms of the industry, salary represented approximately 33% of total compensation out of all the companies we analyzed, while other remuneration made up 67% of the pie. Cal-Maine Foods pays out 39% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

Cal-Maine Foods, Inc.'s Growth

Cal-Maine Foods, Inc. has reduced its earnings per share by 75% a year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. 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 Cal-Maine Foods, Inc. Been A Good Investment?

Given the total shareholder loss of 23% over three years, many shareholders in Cal-Maine Foods, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Cal-Maine Foods that investors should think about before committing capital to this stock.

Important note: Cal-Maine Foods 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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