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This article will reflect on the compensation paid to Fusen Ernie Chen who has served as CEO of Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) since 2016. This analysis will also assess whether Kulicke and Soffa Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Fusen Ernie Chen Compare With Other Companies In The Industry?
Our data indicates that Kulicke and Soffa Industries, Inc. has a market capitalization of US$2.4b, and total annual CEO compensation was reported as US$5.5m for the year to October 2020. Notably, that's an increase of 25% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$726k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$2.5m. This suggests that Fusen Ernie Chen is paid more than the median for the industry. What's more, Fusen Ernie Chen holds US$26m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. There isn't a significant difference between Kulicke and Soffa Industries and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Kulicke and Soffa Industries, Inc.'s Growth Numbers
Kulicke and Soffa Industries, Inc. has reduced its earnings per share by 22% a year over the last three years. Its revenue is up 16% over the last year.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Kulicke and Soffa Industries, Inc. Been A Good Investment?
Boasting a total shareholder return of 58% over three years, Kulicke and Soffa Industries, Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we touched on above, Kulicke and Soffa Industries, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But Kulicke and Soffa Industries is growing its revenue, and total shareholder returns have also been pleasing for the last three years. The only sore spot is EPS growth, which is negative over the same period. Although we would have liked to see EPS growth, positive shareholder returns, and growing revenues make us believe CEO compensation is reasonable.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Kulicke and Soffa Industries that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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