Key Insights

• Cadence Design Systems will host its Annual General Meeting on 2nd of May
• CEO Anirudh Devgan's total compensation includes salary of US$750.0k
• The total compensation is similar to the average for the industry
• Over the past three years, Cadence Design Systems' EPS grew by 17% and over the past three years, the total shareholder return was 114%

The performance at Cadence Design Systems, Inc. (NASDAQ:CDNS) has been quite strong recently and CEO Anirudh Devgan has played a role in it. Coming up to the next AGM on 2nd of May, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

Comparing Cadence Design Systems, Inc.'s CEO Compensation With The Industry

Our data indicates that Cadence Design Systems, Inc. has a market capitalization of US$77b, and total annual CEO compensation was reported as US$17m for the year to December 2023. We note that's a decrease of 46% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$750k.

On comparing similar companies in the American Software industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$15m. From this we gather that Anirudh Devgan is paid around the median for CEOs in the industry. Moreover, Anirudh Devgan also holds US$19m worth of Cadence Design Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 16% of total compensation represents salary and 84% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Cadence Design Systems paid Anirudh Devgan a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Cadence Design Systems, Inc.'s Growth Numbers

Cadence Design Systems, Inc.'s earnings per share (EPS) grew 17% per year over the last three years. It achieved revenue growth of 11% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing 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 Cadence Design Systems, Inc. Been A Good Investment?

We think that the total shareholder return of 114%, over three years, would leave most Cadence Design Systems, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Cadence Design Systems primarily uses non-salary benefits to reward its CEO. The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Cadence Design Systems.

Important note: Cadence Design Systems is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.