Shantanu Narayen has been the CEO of Adobe Inc. (NASDAQ:ADBE) since 2007. First, this article will compare CEO compensation with compensation at other large companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Shantanu Narayen’s Compensation Compare With Similar Sized Companies?
According to our data, Adobe Inc. has a market capitalization of US$177b, and paid its CEO total annual compensation worth US$28m over the year to November 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued 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. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
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?
On average over the last three years, Adobe Inc. has grown earnings per share (EPS) by 31% each year (using a line of best fit). Its revenue is up 24% over last year.
This demonstrates that the company has been improving recently. A good result. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Adobe Inc. Been A Good Investment?
Boasting a total shareholder return of 213% over three years, Adobe Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared total CEO remuneration at Adobe Inc. with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Adobe shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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