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This article will reflect on the compensation paid to Joe Hogan who has served as CEO of Align Technology, Inc. (NASDAQ:ALGN) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Align Technology
Comparing Align Technology, Inc.'s CEO Compensation With the industry
According to our data, Align Technology, Inc. has a market capitalization of US$42b, and paid its CEO total annual compensation worth US$18m over the year to December 2019. We note that's a decrease of 56% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$10m. Accordingly, our analysis reveals that Align Technology, Inc. pays Joe Hogan north of the industry median. Moreover, Joe Hogan also holds US$61m worth of Align Technology stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$1.1m | US$1.1m | 6% |
| Other | US$17m | US$41m | 94% |
| Total Compensation | US$18m | US$42m | 100% |
On an industry level, around 21% of total compensation represents salary and 79% is other remuneration. In Align Technology's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Align Technology, Inc.'s Growth Numbers
Align Technology, Inc.'s earnings per share (EPS) grew 87% per year over the last three years. Revenue was pretty flat on last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Align Technology, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Align Technology, Inc. for providing a total return of 141% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As we touched on above, Align Technology, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But EPS growth and shareholder returns have been top-notch for the past three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. And given most shareholders are probably very happy with recent returns, they might even think that Joe deserves a raise!