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

Key Insights

• Pixelworks to hold its Annual General Meeting on 13th of May
• CEO Todd DeBonis' total compensation includes salary of US$443.6k
• The total compensation is 69% higher than the average for the industry
• Pixelworks' three-year loss to shareholders was 37% while its EPS grew by 17% over the past three years

Shareholders of Pixelworks, Inc. (NASDAQ:PXLW) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 13th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Pixelworks

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

According to our data, Pixelworks, Inc. has a market capitalization of US$109m, and paid its CEO total annual compensation worth US$1.2m over the year to December 2023. Notably, that's a decrease of 17% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$444k.

In comparison with other companies in the American Semiconductor industry with market capitalizations under US$200m, the reported median total CEO compensation was US$734k. Accordingly, our analysis reveals that Pixelworks, Inc. pays Todd DeBonis north of the industry median. Furthermore, Todd DeBonis directly owns US$2.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$444k	US$425k	36%
Other	US$798k	US$1.1m	64%
Total Compensation	US$1.2m	US$1.5m	100%

Speaking on an industry level, nearly 11% of total compensation represents salary, while the remainder of 89% is other remuneration. Pixelworks pays out 36% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Pixelworks, Inc.'s Growth Numbers

Over the past three years, Pixelworks, Inc. has seen its earnings per share (EPS) grow by 17% per year. It saw its revenue drop 15% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Pixelworks, Inc. Been A Good Investment?

With a total shareholder return of -37% over three years, Pixelworks, 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...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for Pixelworks that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.