U.S. Markets open in 6 hrs 1 min

Does NXP Semiconductors N.V.'s (NASDAQ:NXPI) CEO Pay Matter?

Simply Wall St

In 2009 Rick Clemmer was appointed CEO of NXP Semiconductors N.V. (NASDAQ:NXPI). This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for NXP Semiconductors

How Does Rick Clemmer's Compensation Compare With Similar Sized Companies?

According to our data, NXP Semiconductors N.V. has a market capitalization of US$32b, and paid its CEO total annual compensation worth US$77m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.4m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

It would therefore appear that NXP Semiconductors N.V. pays Rick Clemmer more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at NXP Semiconductors has changed over time.

NasdaqGS:NXPI CEO Compensation, December 6th 2019

Is NXP Semiconductors N.V. Growing?

Over the last three years NXP Semiconductors N.V. has grown its earnings per share (EPS) by an average of 17% per year (using a line of best fit). Its revenue is down 5.1% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.

Has NXP Semiconductors N.V. Been A Good Investment?

NXP Semiconductors N.V. has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We examined the amount NXP Semiconductors N.V. pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. Shareholders may want to check for free if NXP Semiconductors insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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. Thank you for reading.