Shareholders Will Probably Be Cautious Of Increasing Teradyne, Inc.'s (NASDAQ:TER) CEO Compensation At The Moment

Key Insights

• Teradyne's Annual General Meeting to take place on 9th of May
• Total pay for CEO Greg Smith includes US$925.0k salary
• Total compensation is 48% below industry average
• Over the past three years, Teradyne's EPS fell by 15% and over the past three years, the total loss to shareholders 31%

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Performance at Teradyne, Inc. (NASDAQ:TER) has not been particularly rosy recently and shareholders will likely be holding CEO Greg Smith and the board accountable for this. The next AGM coming up on 9th of May will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. The data we gathered below shows that CEO compensation looks acceptable for now.

See our latest analysis for Teradyne

How Does Total Compensation For Greg Smith Compare With Other Companies In The Industry?

Our data indicates that Teradyne, Inc. has a market capitalization of US$12b, and total annual CEO compensation was reported as US$12m for the year to December 2024. 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$925k.

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$23m. In other words, Teradyne pays its CEO lower than the industry median. What's more, Greg Smith holds US$2.8m worth of shares in the company in their own name.

Component	2024	2023	Proportion (2024)
Salary	US$925k	US$850k	8%
Other	US$11m	US$9.3m	92%
Total Compensation	US$12m	US$10m	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. It's interesting to note that Teradyne allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Teradyne, Inc.'s Growth Numbers

Teradyne, Inc. has reduced its earnings per share by 15% a year over the last three years. It achieved revenue growth of 9.3% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Teradyne, Inc. Been A Good Investment?

The return of -31% over three years would not have pleased Teradyne, Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

Shareholders may want to check for free if Teradyne insiders are buying or selling shares.

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.