Patrick Harshman became the CEO of Harmonic Inc. (NASDAQ:HLIT) in 2006, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Harmonic.
Comparing Harmonic Inc.'s CEO Compensation With the industry
Our data indicates that Harmonic Inc. has a market capitalization of US$574m, and total annual CEO compensation was reported as US$3.4m for the year to December 2019. That's a notable increase of 44% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$530k.
In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.5m. Hence, we can conclude that Patrick Harshman is remunerated higher than the industry median. Furthermore, Patrick Harshman directly owns US$6.0m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 24% of total compensation out of all the companies we analyzed, while other remuneration made up 76% of the pie. In Harmonic's 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.
Harmonic Inc.'s Growth
Harmonic Inc. has seen its earnings per share (EPS) increase by 73% a year over the past three years. It achieved revenue growth of 2.9% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Harmonic Inc. Been A Good Investment?
Most shareholders would probably be pleased with Harmonic Inc. for providing a total return of 100% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, Harmonic pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, Harmonic has produced strong EPS growth and shareholder returns over the last three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. Given the strong history of shareholder returns, the shareholders are probably very happy with Patrick's performance.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Harmonic 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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.