We Think Some Shareholders May Hesitate To Increase Silicon Laboratories Inc.'s (NASDAQ:SLAB) CEO Compensation

Key Insights

• Silicon Laboratories will host its Annual General Meeting on 18th of April
• Total pay for CEO Matt Johnson includes US$563.7k salary
• The total compensation is similar to the average for the industry
• Silicon Laboratories' EPS grew by 87% over the past three years while total shareholder loss over the past three years was 15%

The underwhelming share price performance of Silicon Laboratories Inc. (NASDAQ:SLAB) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 18th of April could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 Silicon Laboratories

Comparing Silicon Laboratories Inc.'s CEO Compensation With The Industry

According to our data, Silicon Laboratories Inc. has a market capitalization of US$4.2b, and paid its CEO total annual compensation worth US$6.9m over the year to December 2023. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$564k.

For comparison, other companies in the American Semiconductor industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$6.9m. So it looks like Silicon Laboratories compensates Matt Johnson in line with the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	US$564k	US$650k	8%
Other	US$6.3m	US$6.1m	92%
Total Compensation	US$6.9m	US$6.8m	100%

On an industry level, around 11% of total compensation represents salary and 89% is other remuneration. It's interesting to note that Silicon Laboratories 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 Silicon Laboratories Inc.'s Growth Numbers

Silicon Laboratories Inc.'s earnings per share (EPS) grew 87% per year over the last three years. In the last year, its revenue is down 24%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Silicon Laboratories Inc. Been A Good Investment?

Given the total shareholder loss of 15% over three years, many shareholders in Silicon Laboratories Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Silicon Laboratories.

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.