Is Cirrus Logic, Inc. (NASDAQ:CRUS) Excessively Paying Its CEO?
In 2007 Jason Rhode was appointed CEO of Cirrus Logic, Inc. (NASDAQ:CRUS). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Cirrus Logic
How Does Jason Rhode's Compensation Compare With Similar Sized Companies?
According to our data, Cirrus Logic, Inc. has a market capitalization of US$3.2b, and paid its CEO total annual compensation worth US$4.9m over the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$800k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.
So Jason Rhode receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at Cirrus Logic, below.
Is Cirrus Logic, Inc. Growing?
On average over the last three years, Cirrus Logic, Inc. has shrunk earnings per share by 24% each year (measured with a line of best fit). It saw its revenue drop 20% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Cirrus Logic, Inc. Been A Good Investment?
With a total shareholder return of 5.1% over three years, Cirrus Logic, Inc. has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
Jason Rhode is paid around the same as most CEOs of similar size companies.
The company isn't growing earnings per share, and nor have the total returns inspired us. We're not saying the CEO pay is too generous, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. So you may want to check if insiders are buying Cirrus Logic shares with their own money (free access).
If you want to buy a stock that is better than Cirrus Logic, this free list of high return, low debt companies is a great place to look.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
