Shabtai Adlersberg has been the CEO of AudioCodes Ltd. (NASDAQ:AUDC) since 1993, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing AudioCodes Ltd.'s CEO Compensation With the industry
At the time of writing, our data shows that AudioCodes Ltd. has a market capitalization of US$967m, and reported total annual CEO compensation of US$2.4m for the year to December 2019. That's a notable increase of 62% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$371k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$2.4m. So it looks like AudioCodes compensates Shabtai Adlersberg in line with the median for the industry. Moreover, Shabtai Adlersberg also holds US$139m worth of AudioCodes stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. In AudioCodes' case, non-salary compensation represents a greater slice of total remuneration, 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 AudioCodes Ltd.'s Growth Numbers
Over the last three years, AudioCodes Ltd. has shrunk its earnings per share by 15% per year. Its revenue is up 11% over the last year.
Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has AudioCodes Ltd. Been A Good Investment?
Most shareholders would probably be pleased with AudioCodes Ltd. for providing a total return of 358% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, AudioCodes pays its CEO in line with similar-sized companies belonging to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We do not think CEO compensation is a problem, but shareholders might think performance needs to be improved before paying any more.
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 4 warning signs for AudioCodes that you should be aware of before investing.
Important note: AudioCodes is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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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