We Discuss Why The CEO Of InterDigital, Inc. (NASDAQ:IDCC) Is Due For A Pay Rise

Key Insights

• InterDigital will host its Annual General Meeting on 5th of June
• Total pay for CEO Liren Chen includes US$706.0k salary
• The overall pay is 35% below the industry average
• InterDigital's total shareholder return over the past three years was 44% while its EPS grew by 67% over the past three years

The impressive results at InterDigital, Inc. (NASDAQ:IDCC) recently will be great news for shareholders. At the upcoming AGM on 5th of June, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

Check out our latest analysis for InterDigital

How Does Total Compensation For Liren Chen Compare With Other Companies In The Industry?

Our data indicates that InterDigital, Inc. has a market capitalization of US$2.8b, and total annual CEO compensation was reported as US$4.8m for the year to December 2023. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$706k.

For comparison, other companies in the American Software industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$7.3m. This suggests that Liren Chen is paid below the industry median. Moreover, Liren Chen also holds US$17m worth of InterDigital stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$706k	US$690k	15%
Other	US$4.1m	US$4.1m	85%
Total Compensation	US$4.8m	US$4.8m	100%

Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. Although there is a difference in how total compensation is set, InterDigital more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at InterDigital, Inc.'s Growth Numbers

InterDigital, Inc.'s earnings per share (EPS) grew 67% per year over the last three years. Its revenue is up 9.3% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has InterDigital, Inc. Been A Good Investment?

Boasting a total shareholder return of 44% over three years, InterDigital, 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.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for InterDigital that investors should be aware of in a dynamic business environment.

Switching gears from InterDigital, 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.