Yahoo Finance Is Infinera Corporation (NASDAQ:INFN) Excessively Paying Its CEO?
In 2010, Tom Fallon was appointed CEO of Infinera Corporation (NASDAQ:INFN). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Infinera
How Does Tom Fallon's Compensation Compare With Similar Sized Companies?
Our data indicates that Infinera Corporation is worth US$1.1b, and total annual CEO compensation was reported as US$3.0m for the year to December 2019. That's actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$520k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$3.4m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Infinera stands. On a sector level, around 24% of total compensation represents salary and 76% is other remuneration. So it seems like there isn't a significant difference between Infinera and the broader market, in terms of salary allocation in the overall compensation package.
That means Tom Fallon receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. You can see, below, how CEO compensation at Infinera has changed over time.
Is Infinera Corporation Growing?
Over the last three years Infinera Corporation has shrunk its earnings per share by an average of 49% per year (measured with a line of best fit). It achieved revenue growth of 38% over the last year.
Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. You might want to check this free visual report on analyst forecasts for future earnings.
Has Infinera Corporation Been A Good Investment?
Given the total loss of 37% over three years, many shareholders in Infinera Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Remuneration for Tom Fallon is close enough to the median pay for a CEO of a similar sized company .
The company cannot boast particularly strong per share growth. And it's hard to argue that the returns over the last three years have delighted. So many would argue that the CEO is certainly not underpaid. Looking into other areas, we've picked out 4 warning signs for Infinera that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than Infinera, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
