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What Can We Learn About Littelfuse's (NASDAQ:LFUS) CEO Compensation?

Simply Wall St
·3 mins read

This article will reflect on the compensation paid to Dave Heinzmann who has served as CEO of Littelfuse, Inc. (NASDAQ:LFUS) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Littelfuse

Comparing Littelfuse, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Littelfuse, Inc. has a market capitalization of US$4.4b, and reported total annual CEO compensation of US$3.9m for the year to December 2019. That's a notable decrease of 20% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$872k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$6.1m. Accordingly, Littelfuse pays its CEO under the industry median. Moreover, Dave Heinzmann also holds US$7.1m worth of Littelfuse stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$872k

US$763k

22%

Other

US$3.0m

US$4.1m

78%

Total Compensation

US$3.9m

US$4.9m

100%

On an industry level, around 36% of total compensation represents salary and 64% is other remuneration. Littelfuse sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

Littelfuse, Inc.'s Growth

Over the last three years, Littelfuse, Inc. has shrunk its earnings per share by 6.9% per year. Its revenue is down 15% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Littelfuse, Inc. Been A Good Investment?

With a total shareholder return of 1.5% over three years, Littelfuse, 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.

To Conclude...

As we noted earlier, Littelfuse pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Shareholder returns have been uninspiring, but earnings growth has arguably been worse, over the last three years. So, although we can't say CEO compensation is very high, shareholders might want to see an improvement in overall performance before agreeing that Dave deserves a bump.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Littelfuse that you should be aware of before investing.

Important note: Littelfuse 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.