Yahoo Finance Here's Why Shareholders Should Examine Ambarella, Inc.'s (NASDAQ:AMBA) CEO Compensation Package More Closely
Key Insights
Ambarella to hold its Annual General Meeting on 12th of June
Total pay for CEO Fermi Wang includes US$561.0k salary
Total compensation is similar to the industry average
Over the past three years, Ambarella's EPS fell by 53% and over the past three years, the total loss to shareholders 39%
Shareholders will probably not be too impressed with the underwhelming results at Ambarella, Inc. (NASDAQ:AMBA) recently. At the upcoming AGM on 12th of June, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.
View our latest analysis for Ambarella
How Does Total Compensation For Fermi Wang Compare With Other Companies In The Industry?
Our data indicates that Ambarella, Inc. has a market capitalization of US$2.3b, and total annual CEO compensation was reported as US$5.8m for the year to January 2024. 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$561k.
For comparison, other companies in the American Semiconductor industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$5.7m. From this we gather that Fermi Wang is paid around the median for CEOs in the industry. Furthermore, Fermi Wang directly owns US$48m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2024 | 2023 | Proportion (2024) |
Salary | US$561k | US$561k | 10% |
Other | US$5.2m | US$5.3m | 90% |
Total Compensation | US$5.8m | US$5.9m | 100% |
On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. Ambarella pays a modest slice of remuneration through salary, as compared 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 Ambarella, Inc.'s Growth Numbers
Over the last three years, Ambarella, Inc. has shrunk its earnings per share by 53% per year. Its revenue is down 29% over the previous year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Ambarella, Inc. Been A Good Investment?
The return of -39% over three years would not have pleased Ambarella, Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Ambarella that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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.
