U.S. Markets closed

Is Universal Display Corporation's (NASDAQ:OLED) CEO Pay Justified?

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

In 2008 Steve Abramson was appointed CEO of Universal Display Corporation (NASDAQ:OLED). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Universal Display

How Does Steve Abramson's Compensation Compare With Similar Sized Companies?

Our data indicates that Universal Display Corporation is worth US$9.7b, and total annual CEO compensation is US$6.9m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$702k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).

A first glance this seems like a real positive for shareholders, since Steve Abramson is paid less than the average total compensation paid by other large companies. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at Universal Display has changed from year to year.

NasdaqGS:OLED CEO Compensation, July 20th 2019

Is Universal Display Corporation Growing?

Universal Display Corporation has increased its earnings per share (EPS) by an average of 24% a year, over the last three years (using a line of best fit). It saw its revenue drop -9.9% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.

Has Universal Display Corporation Been A Good Investment?

Boasting a total shareholder return of 202% over three years, Universal Display Corporation has done well by shareholders. 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.

In Summary...

It appears that Universal Display Corporation remunerates its CEO below most large companies. Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Steve Abramson deserves a raise!

Most shareholders like to see a modestly paid CEO combined with strong performance by the company. The cherry on top would be if company insiders are buying shares with their own money. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Universal Display (free visualization of insider trades).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.