Yahoo Finance How Should Investors React To Adobe Inc.'s (NASDAQ:ADBE) CEO Pay?
Shantanu Narayen became the CEO of Adobe Inc. (NASDAQ:ADBE) in 2007. First, this article will compare CEO compensation with compensation at 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 process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Adobe
How Does Shantanu Narayen's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Adobe Inc. has a market cap of US$169b, and reported total annual CEO compensation of US$28m for the year to November 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
As you can see, Shantanu Narayen is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Adobe Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Adobe, below.
Is Adobe Inc. Growing?
Adobe Inc. has increased its earnings per share (EPS) by an average of 31% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 24%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.
Has Adobe Inc. Been A Good Investment?
Most shareholders would probably be pleased with Adobe Inc. for providing a total return of 213% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
We compared total CEO remuneration at Adobe Inc. with the amount paid at other large companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Adobe insiders are buying or selling shares.
If you want to buy a stock that is better than Adobe, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
