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Mark Jagiela became the CEO of Teradyne, Inc. (NASDAQ:TER) in 2014, 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 assess whether Teradyne pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Mark Jagiela Compare With Other Companies In The Industry?
At the time of writing, our data shows that Teradyne, Inc. has a market capitalization of US$17b, and reported total annual CEO compensation of US$8.0m for the year to December 2019. We note that's an increase of 12% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$932k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. This suggests that Teradyne remunerates its CEO largely in line with the industry average. What's more, Mark Jagiela holds US$27m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Teradyne 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.
A Look at Teradyne, Inc.'s Growth Numbers
Teradyne, Inc.'s earnings per share (EPS) grew 26% per year over the last three years. It achieved revenue growth of 40% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Teradyne, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Teradyne, Inc. for providing a total return of 142% 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 touched on above, Teradyne, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company is growing EPS and total shareholder returns have been pleasing. So one could argue that CEO compensation is quite modest, if you consider company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Teradyne that you should be aware of before investing.
Switching gears from Teradyne, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
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