In 2005 Gideon Wertheizer was appointed CEO of CEVA, Inc. (NASDAQ:CEVA). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for CEVA
How Does Gideon Wertheizer's Compensation Compare With Similar Sized Companies?
According to our data, CEVA, Inc. has a market capitalization of US$653m, and paid its CEO total annual compensation worth US$1.6m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$456k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO total compensation was US$3.2m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 16% of total compensation out of all the companies we analysed, while other remuneration made up 84% of the pie. CEVA is paying a higher share of its remuneration through a salary in comparison to the overall industry.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business. The graphic below shows how CEO compensation at CEVA has changed from year to year.
Is CEVA, Inc. Growing?
On average over the last three years, CEVA, Inc. has shrunk earnings per share by 91% each year (measured with a line of best fit). Its revenue is up 12% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has CEVA, Inc. Been A Good Investment?
Given the total loss of 17% over three years, many shareholders in CEVA, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
It looks like CEVA, Inc. pays its CEO less than similar sized companies.
The compensation paid to Gideon Wertheizer is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. Moving away from CEO compensation for the moment, we've identified 3 warning signs for CEVA that you should be aware of before investing.
Important note: CEVA 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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