In 2016 Fusen Ernie Chen was appointed CEO of Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC). 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. 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.
How Does Fusen Ernie Chen's Compensation Compare With Similar Sized Companies?
Our data indicates that Kulicke and Soffa Industries, Inc. is worth US$1.5b, and total annual CEO compensation was reported as US$4.4m for the year to September 2019. While we always look at total compensation first, we note that the salary component is less, at US$689k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.8m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Kulicke and Soffa Industries stands. On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Kulicke and Soffa Industries is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
So Fusen Ernie Chen is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. The graphic below shows how CEO compensation at Kulicke and Soffa Industries has changed from year to year.
Is Kulicke and Soffa Industries, Inc. Growing?
On average over the last three years, Kulicke and Soffa Industries, Inc. has shrunk earnings per share by 25% each year (measured with a line of best fit). Its revenue is down 37% over last year.
Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Kulicke and Soffa Industries, Inc. Been A Good Investment?
With a total shareholder return of 16% over three years, Kulicke and Soffa Industries, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
Fusen Ernie Chen is paid around what is normal for the leaders of comparable size companies.
We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We're not saying the CEO pay is too generous, but one might argue that the company should improve returns to shareholders before increasing it. Shifting gears from CEO pay for a second, we've picked out 2 warning signs for Kulicke and Soffa Industries that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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