We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Analog Devices, Inc.'s (NASDAQ:ADI) CEO For Now

Key Insights

• Analog Devices will host its Annual General Meeting on 13th of March
• Total pay for CEO Vince Roche includes US$1.13m salary
• Total compensation is 54% above industry average
• Analog Devices' total shareholder return over the past three years was 38% while its EPS grew by 14% over the past three years

Under the guidance of CEO Vince Roche, Analog Devices, Inc. (NASDAQ:ADI) has performed reasonably well recently. As shareholders go into the upcoming AGM on 13th of March, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for Analog Devices

How Does Total Compensation For Vince Roche Compare With Other Companies In The Industry?

Our data indicates that Analog Devices, Inc. has a market capitalization of US$94b, and total annual CEO compensation was reported as US$26m for the year to October 2023. We note that's an increase of 16% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

In comparison with other companies in the American Semiconductor industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$17m. Hence, we can conclude that Vince Roche is remunerated higher than the industry median. Furthermore, Vince Roche directly owns US$12m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.1m	US$1.1m	4%
Other	US$24m	US$21m	96%
Total Compensation	US$26m	US$22m	100%

Talking in terms of the industry, salary represented approximately 11% of total compensation out of all the companies we analyzed, while other remuneration made up 89% of the pie. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Vince Roche as compared to non-salary compensation over the one-year period examined. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Analog Devices, Inc.'s Growth Numbers

Analog Devices, Inc. has seen its earnings per share (EPS) increase by 14% a year over the past three years. Its revenue is down 8.2% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Analog Devices, Inc. Been A Good Investment?

We think that the total shareholder return of 38%, over three years, would leave most Analog Devices, Inc. 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.

In Summary...

Analog Devices primarily uses non-salary benefits to reward its CEO. Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

So you may want to check if insiders are buying Analog Devices shares with their own money (free access).

Switching gears from Analog Devices, 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.

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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.