Keh-Shew Lu became the CEO of Diodes Incorporated (NASDAQ:DIOD) in 2005, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Keh-Shew Lu Compare With Other Companies In The Industry?
According to our data, Diodes Incorporated has a market capitalization of US$3.0b, and paid its CEO total annual compensation worth US$7.1m over the year to December 2019. That's a notable increase of 16% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$724k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.7m. So it looks like Diodes compensates Keh-Shew Lu in line with the median for the industry. What's more, Keh-Shew Lu holds US$63m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. Diodes pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Diodes Incorporated's Growth Numbers
Over the past three years, Diodes Incorporated has seen its earnings per share (EPS) grow by 66% per year. In the last year, its revenue is down 5.2%.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Diodes Incorporated Been A Good Investment?
Boasting a total shareholder return of 71% over three years, Diodes Incorporated 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.
As we noted earlier, Diodes pays its CEO in line with similar-sized companies belonging to the same industry. The company is growing EPS and total shareholder returns have been pleasing. Indeed, many might consider that Keh-Shew is compensated rather modestly, given the solid company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Diodes that investors should think about before committing capital to this stock.
Switching gears from Diodes, 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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