Here's Why Shareholders May Want To Be Cautious With Increasing Roku, Inc.'s (NASDAQ:ROKU) CEO Pay Packet

Key Insights

• Roku to hold its Annual General Meeting on 6th of June
• CEO Anthony Wood's total compensation includes salary of US$1.20m
• Total compensation is 1,394% above industry average
• Roku's three-year loss to shareholders was 82% while its EPS was down 98% over the past three years

The underwhelming share price performance of Roku, Inc. (NASDAQ:ROKU) in the past three years would have disappointed many shareholders. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 6th of June, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Roku

Comparing Roku, Inc.'s CEO Compensation With The Industry

According to our data, Roku, Inc. has a market capitalization of US$8.3b, and paid its CEO total annual compensation worth US$20m over the year to December 2023. That's a slight decrease of 3.7% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.

For comparison, other companies in the American Entertainment industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$1.4m. This suggests that Anthony Wood is paid more than the median for the industry. What's more, Anthony Wood holds US$1.0b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.2m	6%
Other	US$19m	US$20m	94%
Total Compensation	US$20m	US$21m	100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. Roku sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Roku, Inc.'s Growth Numbers

Roku, Inc. has reduced its earnings per share by 98% a year over the last three years. In the last year, its revenue is up 16%.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Roku, Inc. Been A Good Investment?

With a total shareholder return of -82% over three years, Roku, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Roku that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.