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How Should Investors React To AudioCodes' (NASDAQ:AUDC) CEO Pay?

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Shabtai Adlersberg became the CEO of AudioCodes Ltd. (NASDAQ:AUDC) in 1993, 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 AudioCodes.

Check out our latest analysis for AudioCodes

How Does Total Compensation For Shabtai Adlersberg Compare With Other Companies In The Industry?

According to our data, AudioCodes Ltd. has a market capitalization of US$1.1b, and paid its CEO total annual compensation worth US$2.4m over the year to December 2019. We note that's an increase of 62% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$371k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.7m. So it looks like AudioCodes compensates Shabtai Adlersberg in line with the median for the industry. Furthermore, Shabtai Adlersberg directly owns US$154m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

US$371k

US$366k

16%

Other

US$2.0m

US$1.1m

84%

Total Compensation

US$2.4m

US$1.5m

100%

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. AudioCodes pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

AudioCodes Ltd.'s Growth

Over the last three years, AudioCodes Ltd. has shrunk its earnings per share by 26% per year. It achieved revenue growth of 14% over the last year.

Few shareholders would be pleased to read that earnings have declined. While the revenue growth is good to see, it is outweighed by the fact that earnings are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has AudioCodes Ltd. Been A Good Investment?

We think that the total shareholder return of 424%, over three years, would leave most AudioCodes Ltd. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we noted earlier, AudioCodes pays its CEO in line with similar-sized companies belonging to the same industry. Some investors may take issue with this, especially considering shrinking earnings for the past three years. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We're not saying CEO compensation is too generous, but shareholders might think performance needs to be improved before paying any more.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 4 warning signs for AudioCodes that investors should be aware of in a dynamic business environment.

Important note: AudioCodes is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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 editorial-team@simplywallst.com.