Here's Why Shareholders May Want To Be Cautious With Increasing X-FAB Silicon Foundries SE's (EPA:XFAB) CEO Pay Packet

Key Insights

• X-FAB Silicon Foundries to hold its Annual General Meeting on 25th of April
• Salary of US$394.7k is part of CEO Rudi De Winter's total remuneration
• The overall pay is comparable to the industry average
• X-FAB Silicon Foundries' EPS grew by 129% over the past three years while total shareholder loss over the past three years was 11%

In the past three years, the share price of X-FAB Silicon Foundries SE (EPA:XFAB) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 25th of April. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for X-FAB Silicon Foundries

Comparing X-FAB Silicon Foundries SE's CEO Compensation With The Industry

Our data indicates that X-FAB Silicon Foundries SE has a market capitalization of €891m, and total annual CEO compensation was reported as US$560k for the year to December 2023. That's a modest increase of 7.3% on the prior year. In particular, the salary of US$394.7k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the French Semiconductor industry with market capitalizations between €376m and €1.5b, we discovered that the median CEO total compensation of that group was US$680k. This suggests that X-FAB Silicon Foundries remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	US$395k	US$385k	70%
Other	US$166k	US$138k	30%
Total Compensation	US$560k	US$522k	100%

Talking in terms of the industry, salary represented approximately 46% of total compensation out of all the companies we analyzed, while other remuneration made up 54% of the pie. X-FAB Silicon Foundries is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at X-FAB Silicon Foundries SE's Growth Numbers

X-FAB Silicon Foundries SE's earnings per share (EPS) grew 129% per year over the last three years. It achieved revenue growth of 23% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 X-FAB Silicon Foundries SE Been A Good Investment?

Since shareholders would have lost about 11% over three years, some X-FAB Silicon Foundries SE investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at X-FAB Silicon Foundries.

Switching gears from X-FAB Silicon Foundries, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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

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.