We Discuss Why Quad/Graphics, Inc.'s (NYSE:QUAD) CEO Compensation May Be Closely Reviewed

The results at Quad/Graphics, Inc. (NYSE:QUAD) have been quite disappointing recently and CEO J. Quadracci bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 17 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Quad/Graphics

Comparing Quad/Graphics, Inc.'s CEO Compensation With the industry

Our data indicates that Quad/Graphics, Inc. has a market capitalization of US$175m, and total annual CEO compensation was reported as US$3.4m for the year to December 2020. Notably, that's a decrease of 46% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$850k.

On comparing similar companies from the same industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$2.0m. Hence, we can conclude that J. Quadracci is remunerated higher than the industry median. What's more, J. Quadracci holds US$5.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. There isn't a significant difference between Quad/Graphics and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Quad/Graphics, Inc.'s Growth

Quad/Graphics, Inc. has reduced its earnings per share by 107% a year over the last three years. Its revenue is down 26% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Quad/Graphics, Inc. Been A Good Investment?

The return of -80% over three years would not have pleased Quad/Graphics, Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Quad/Graphics that investors should think about before committing capital to this stock.

Important note: Quad/Graphics 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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