Yahoo Finance What Did Shopify's (NYSE:SHOP) CEO Take Home Last Year?
Tobi Lütke became the CEO of Shopify Inc. (NYSE:SHOP) in 2008, 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.
Check out our latest analysis for Shopify
Comparing Shopify Inc.'s CEO Compensation With the industry
Our data indicates that Shopify Inc. has a market capitalization of US$127b, and total annual CEO compensation was reported as US$11m for the year to December 2019. That's a notable increase of 24% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$616k.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$11m. This suggests that Shopify remunerates its CEO largely in line with the industry average. What's more, Tobi Lütke holds US$8.0b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$616k | US$586k | 6% |
Other | US$10m | US$8.0m | 94% |
Total Compensation | US$11m | US$8.6m | 100% |
Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. In Shopify's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Shopify Inc.'s Growth
Over the last three years, Shopify Inc. has shrunk its earnings per share by 29% per year. In the last year, its revenue is up 60%.
The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Shopify Inc. Been A Good Investment?
Boasting a total shareholder return of 943% over three years, Shopify Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As previously discussed, Tobi is compensated close to the median for companies of its size, and which belong to the same industry. Shareholder returns for the company have been strong for the last three years. Meanwhile, revenues have been increasing recently On a worrying note, its important to acknowledge that EPS growth has been negative recently. Considering overall performance, it's fair to say Tobi is paid reasonably.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Shopify that investors should think about before committing capital to this stock.
Important note: Shopify 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.
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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