Here's Why Shareholders May Want To Be Cautious With Increasing Synaptics Incorporated's (NASDAQ:SYNA) CEO Pay Packet
Key Insights
Synaptics to hold its Annual General Meeting on 24th of October
Total pay for CEO Michael E. Hurlston includes US$725.0k salary
The overall pay is 190% above the industry average
Over the past three years, Synaptics' EPS fell by 19% and over the past three years, the total shareholder return was 20%
Despite Synaptics Incorporated's (NASDAQ:SYNA) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 24th of October. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
View our latest analysis for Synaptics
How Does Total Compensation For Michael E. Hurlston Compare With Other Companies In The Industry?
At the time of writing, our data shows that Synaptics Incorporated has a market capitalization of US$3.8b, and reported total annual CEO compensation of US$20m for the year to June 2023. That's a notable increase of 38% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$725k.
On comparing similar companies from the American Semiconductor industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$6.8m. Hence, we can conclude that Michael E. Hurlston is remunerated higher than the industry median. What's more, Michael E. Hurlston holds US$31m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$725k | US$700k | 4% |
Other | US$19m | US$13m | 96% |
Total Compensation | US$20m | US$14m | 100% |
Speaking on an industry level, nearly 12% of total compensation represents salary, while the remainder of 88% is other remuneration. Investors may find it interesting that Synaptics paid a marginal salary to Michael E. Hurlston, over the past year, focusing on non-salary compensation instead. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Synaptics Incorporated's Growth Numbers
Over the last three years, Synaptics Incorporated has shrunk its earnings per share by 19% per year. Its revenue is down 22% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Synaptics Incorporated Been A Good Investment?
Synaptics Incorporated has served shareholders reasonably well, with a total return of 20% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
Synaptics primarily uses non-salary benefits to reward its CEO. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Synaptics (1 is concerning!) that you should be aware of before investing here.
Important note: Synaptics 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
