In 2014 Mark Jagiela was appointed CEO of Teradyne, Inc. (NASDAQ:TER). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Mark Jagiela's Compensation Compare With Similar Sized Companies?
Our data indicates that Teradyne, Inc. is worth US$10b, and total annual CEO compensation was reported as US$7.2m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$905k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. 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 Mark Jagiela 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.
You can see a visual representation of the CEO compensation at Teradyne, below.
Is Teradyne, Inc. Growing?
On average over the last three years, Teradyne, Inc. has grown earnings per share (EPS) by 74% each year (using a line of best fit). It achieved revenue growth of 7.3% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders 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 177% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that Teradyne, Inc. 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 Mark Jagiela 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. Shareholders may want to check for free if Teradyne insiders are buying or selling shares.
Important note: Teradyne may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.