A Quick Analysis On Altair Engineering's (NASDAQ:ALTR) CEO Compensation

Simply Wall St
November 07, 2020

This article will reflect on the compensation paid to Jim Scapa who has served as CEO of Altair Engineering Inc. (NASDAQ:ALTR) since 1992. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Altair Engineering

How Does Total Compensation For Jim Scapa Compare With Other Companies In The Industry?

According to our data, Altair Engineering Inc. has a market capitalization of US$3.7b, and paid its CEO total annual compensation worth US$2.4m over the year to December 2019. We note that's an increase of 21% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$830k.

On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.4m. That is to say, Jim Scapa is paid under the industry median. What's more, Jim Scapa holds US$908m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$830k US$830k 35%
Other US$1.5m US$1.1m 65%
Total CompensationUS$2.4m US$2.0m100%

On an industry level, roughly 12% of total compensation represents salary and 88% is other remuneration. Altair Engineering is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NasdaqGS:ALTR CEO Compensation November 7th 2020

Altair Engineering Inc.'s Growth

Altair Engineering Inc.'s earnings per share (EPS) grew 78% per year over the last three years. Its revenue is up 5.0% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Altair Engineering Inc. Been A Good Investment?

Boasting a total shareholder return of 141% over three years, Altair Engineering Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we noted earlier, Altair Engineering pays its CEO lower than the norm for similar-sized companies belonging to the same industry. When taking into account the company's strong EPS growth over the past three years, it appears CEO compensation is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think Jim deserves a raise!

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Altair Engineering that investors should think about before committing capital to this stock.

Switching gears from Altair Engineering, 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. 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.
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