Yahoo Finance The Compensation For Cadence Design Systems, Inc.'s (NASDAQ:CDNS) CEO Looks Deserved And Here's Why
We have been pretty impressed with the performance at Cadence Design Systems, Inc. (NASDAQ:CDNS) recently and CEO Lip-Bu Tan deserves a mention for their role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 06 May 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.
See our latest analysis for Cadence Design Systems
How Does Total Compensation For Lip-Bu Tan Compare With Other Companies In The Industry?
According to our data, Cadence Design Systems, Inc. has a market capitalization of US$37b, and paid its CEO total annual compensation worth US$9.6m over the year to January 2021. Notably, that's a decrease of 50% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$739k.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.8m. So it looks like Cadence Design Systems compensates Lip-Bu Tan in line with the median for the industry. Furthermore, Lip-Bu Tan directly owns US$281m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2021 | 2019 | Proportion (2021) |
Salary | US$739k | US$725k | 8% |
Other | US$8.9m | US$18m | 92% |
Total Compensation | US$9.6m | US$19m | 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. In Cadence Design Systems' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Cadence Design Systems, Inc.'s Growth Numbers
Cadence Design Systems, Inc. has seen its earnings per share (EPS) increase by 46% a year over the past three years. Its revenue is up 18% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Cadence Design Systems, Inc. Been A Good Investment?
Boasting a total shareholder return of 232% over three years, Cadence Design Systems, 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...
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
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 1 warning sign for Cadence Design Systems that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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