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

Key Insights

• FormFactor to hold its Annual General Meeting on 16th of May
• Salary of US$592.3k is part of CEO Mike Slessor's total remuneration
• The total compensation is similar to the average for the industry
• FormFactor's three-year loss to shareholders was 21% while its EPS was down 16% over the past three years

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Shareholders of FormFactor, Inc. (NASDAQ:FORM) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also lacking, despite revenue growth. The AGM coming up on 16th of May will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for FormFactor

How Does Total Compensation For Mike Slessor Compare With Other Companies In The Industry?

According to our data, FormFactor, Inc. has a market capitalization of US$2.3b, and paid its CEO total annual compensation worth US$5.3m over the year to December 2024. That's a notable decrease of 21% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$592k.

In comparison with other companies in the American Semiconductor industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$5.3m. This suggests that FormFactor remunerates its CEO largely in line with the industry average. Furthermore, Mike Slessor directly owns US$15m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	US$592k	US$550k	11%
Other	US$4.7m	US$6.2m	89%
Total Compensation	US$5.3m	US$6.7m	100%

Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. It's interesting to note that FormFactor allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at FormFactor, Inc.'s Growth Numbers

Over the last three years, FormFactor, Inc. has shrunk its earnings per share by 16% per year. Its revenue is up 15% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has FormFactor, Inc. Been A Good Investment?

With a three year total loss of 21% for the shareholders, FormFactor, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for FormFactor that investors should be aware of in a dynamic business environment.

Switching gears from FormFactor, 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.