iRobot Corporation's (NASDAQ:IRBT) CEO Will Probably Have Their Compensation Approved By Shareholders

We have been pretty impressed with the performance at iRobot Corporation (NASDAQ:IRBT) recently and CEO Colin Angle deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 25 May 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See our latest analysis for iRobot

Comparing iRobot Corporation's CEO Compensation With the industry

Our data indicates that iRobot Corporation has a market capitalization of US$2.7b, and total annual CEO compensation was reported as US$6.2m for the year to January 2021. That's a slight decrease of 8.0% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$825k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$6.5m. So it looks like iRobot compensates Colin Angle in line with the median for the industry. What's more, Colin Angle holds US$25m 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 25% of total compensation out of all the companies we analyzed, while other remuneration made up 75% of the pie. It's interesting to note that iRobot allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at iRobot Corporation's Growth Numbers

iRobot Corporation has seen its earnings per share (EPS) increase by 46% a year over the past three years. In the last year, its revenue is up 32%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has iRobot Corporation Been A Good Investment?

We think that the total shareholder return of 53%, over three years, would leave most iRobot Corporation shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for iRobot that investors should think about before committing capital to this stock.

Important note: iRobot 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.

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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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