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How Much Did Cadence Design Systems Inc’s (NASDAQ:CDNS) CEO Pocket Last Year?

Lip-Bu Tan became the CEO of Cadence Design Systems Inc (NASDAQ:CDNS) in 2009. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Cadence Design Systems

How Does Lip-Bu Tan’s Compensation Compare With Similar Sized Companies?

According to our data, Cadence Design Systems Inc has a market capitalization of US$12b, and pays its CEO total annual compensation worth US$8.0m. That’s just a smallish increase of 4.7% on last year. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m.

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So Lip-Bu Tan receives a similar amount to the median CEO pay, amongst 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 Cadence Design Systems has changed from year to year.

NasdaqGS:CDNS CEO Compensation November 22nd 18
NasdaqGS:CDNS CEO Compensation November 22nd 18

Is Cadence Design Systems Inc Growing?

On average over the last three years, Cadence Design Systems Inc has shrunk earnings per share by 2.6% each year. In the last year, its revenue is up 8.4%.

Unfortunately there is a complete lack of earnings per share improvement, over three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.

It could be important to check this free visual depiction of what analysts expect for the future.

Has Cadence Design Systems Inc Been A Good Investment?

Boasting a total shareholder return of 95% over three years, Cadence Design Systems Inc has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO is paid more than is normal for a company of its size.

In Summary…

Remuneration for Lip-Bu Tan is close enough to the median pay for a CEO of a large company .

The company isn’t growing earnings per share, but shareholder returns have been strong over the last three years. So we can’t see a reason to suggest the pay is inappropriate.

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.