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Patrick Harshman became the CEO of Harmonic Inc. (NASDAQ:HLIT) in 2006. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Patrick Harshman's Compensation Compare With Similar Sized Companies?
Our data indicates that Harmonic Inc. is worth US$654m, and total annual CEO compensation was reported as US$2.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$515k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.6m.
So Patrick Harshman is paid around the average of the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at Harmonic, below.
Is Harmonic Inc. Growing?
Harmonic Inc. has increased its earnings per share (EPS) by an average of 62% a year, over the last three years (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
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. It could be important to check this free visual depiction of what analysts expect for the future.
Has Harmonic Inc. Been A Good Investment?
Boasting a total shareholder return of 40% over three years, Harmonic 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.
Patrick Harshman is paid around the same as most CEOs of similar size companies.
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Shareholders may want to check for free if Harmonic insiders are buying or selling shares.
Important note: Harmonic may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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