How Much is Silicom Ltd.'s (NASDAQ:SILC) CEO Getting Paid?
In 2001 Shaike Orbach was appointed CEO of Silicom Ltd. (NASDAQ:SILC). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Silicom
How Does Shaike Orbach's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Silicom Ltd. has a market cap of US$199m, and reported total annual CEO compensation of US$885k for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$354k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.5m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Silicom. On a sector level, around 27% of total compensation represents salary and 73% is other remuneration. Silicom is paying a higher share of its remuneration through a salary in comparison to the overall industry.
Most shareholders would consider it a positive that Shaike Orbach takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see, below, how CEO compensation at Silicom has changed over time.
Is Silicom Ltd. Growing?
Silicom Ltd. has seen earnings per share (EPS) move positively by an average of 1.3% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 21%.
I would argue that the lack of revenue growth in the last year is less than ideal, but the improvement in EPS is good. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Silicom Ltd. Been A Good Investment?
Since shareholders would have lost about 44% over three years, some Silicom Ltd. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
It looks like Silicom Ltd. pays its CEO less than similar sized companies.
Shaike Orbach is paid less than CEOs of similar size companies, but growth hasn't been particularly impressive and the total shareholder return over three years would leave many disappointed. I am not concerned by the CEO compensation, but it would be good to see improved performance before pay increases. On another note, we've spotted 1 warning sign for Silicom that investors should look into moving forward.
If you want to buy a stock that is better than Silicom, this free list of high return, low debt companies is a great place to look.
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.
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