Mark Widmar has been the CEO of First Solar, Inc. (NASDAQ:FSLR) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Mark Widmar’s Compensation Compare With Similar Sized Companies?
According to our data, First Solar, Inc. has a market capitalization of US$6.4b, and pays its CEO total annual compensation worth US$7.0m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$875k. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.9m.
That means Mark Widmar receives fairly typical remuneration for the CEO of a company that size. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at First Solar has changed from year to year.
Is First Solar, Inc. Growing?
First Solar, Inc. has reduced its earnings per share by an average of 17% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 7.9% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Has First Solar, Inc. Been A Good Investment?
Most shareholders would probably be pleased with First Solar, Inc. for providing a total return of 61% over three years. 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.
Mark Widmar is paid around the same as most CEOs of similar size companies.
We feel that earnings per share have been a bit disappointing, but it’s nice to see positive shareholder returns over the last three years. So we think most shareholders wouldn’t be too worried about CEO compensation, which is close to the median for similar sized companies. Whatever your view on compensation, you might want to check if insiders are buying or selling First Solar shares (free trial).
Important note: First Solar may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.