Key Insights

• Altair Engineering to hold its Annual General Meeting on 16th of May

• Salary of US$860.0k is part of CEO Jim Scapa's total remuneration

• The overall pay is comparable to the industry average

• Over the past three years, Altair Engineering's EPS fell by 18% and over the past three years, the total shareholder return was 35%

Altair Engineering Inc. (NASDAQ:ALTR) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 16th of May. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Altair Engineering

Comparing Altair Engineering Inc.'s CEO Compensation With The Industry

According to our data, Altair Engineering Inc. has a market capitalization of US$7.1b, and paid its CEO total annual compensation worth US$7.3m over the year to December 2023. We note that's an increase of 42% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$860k.

In comparison with other companies in the American Software industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$9.3m. So it looks like Altair Engineering compensates Jim Scapa in line with the median for the industry. Furthermore, Jim Scapa directly owns US$2.9b worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. It's interesting to note that Altair Engineering allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Altair Engineering Inc.'s Growth

Over the last three years, Altair Engineering Inc. has shrunk its earnings per share by 18% per year. It achieved revenue growth of 7.1% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Altair Engineering Inc. Been A Good Investment?

We think that the total shareholder return of 35%, over three years, would leave most Altair Engineering Inc. shareholders smiling. 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.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Altair Engineering that investors should look into moving forward.

Switching gears from Altair Engineering, 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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.