DLB - Dolby Laboratories: Executive Compensation Not In Line With Operational Performance

• Dolby is a high-margin business with a wide moat. The company generates its profits by licensing its proprietary audio and video technologies.
• It is hard to imagine that there are people who have never heard of the company or used its products - intentionally or unintentionally.
• The company experienced a few years of sluggishness, but has returned to moderate growth. The pandemic has not significantly affected Dolby, in part due to its debt-free balance sheet.
• However, from a stock-based compensation perspective, executive compensation appears to be disproportionate to operating profitability.
• The stock is not cheap even after the recent decline in share price and is likely to suffer further in the event of a recession. I keep this underfollowed company on my watch list.

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