How Should Investors Feel About EPAM Systems’ (NYSE:EPAM) CEO Remuneration?

Arkadiy Dobkin has been the CEO of EPAM Systems, Inc. (NYSE:EPAM) since 2002, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for EPAM Systems.

Check out our latest analysis for EPAM Systems

Comparing EPAM Systems, Inc.’s CEO Compensation With the industry

At the time of writing, our data shows that EPAM Systems, Inc. has a market capitalization of US$19b, and reported total annual CEO compensation of US$4.3m for the year to December 2019. That’s a notable increase of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$588k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. In other words, EPAM Systems pays its CEO lower than the industry median. Moreover, Arkadiy Dobkin also holds US$628m worth of EPAM Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary US$588k US$538k 14%
Other US$3.7m US$3.2m 86%
Total CompensationUS$4.3m US$3.8m100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. There isn’t a significant difference between EPAM Systems and the broader market, in terms of salary allocation in the overall compensation package. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.

ceo-compensation
NYSE:EPAM CEO Compensation September 3rd 2020

EPAM Systems, Inc.’s Growth

EPAM Systems, Inc.’s earnings per share (EPS) grew 34% per year over the last three years. In the last year, its revenue is up 22%.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..

Has EPAM Systems, Inc. Been A Good Investment?

Boasting a total shareholder return of 298% over three years, EPAM Systems, 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.

In Summary…

As previously discussed, Arkadiy is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Considering robust EPS growth, we believe Arkadiy to be modestly paid. Given the strong history of shareholder returns, the shareholders are probably very happy with Arkadiy’s performance.

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 EPAM Systems that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Promoted
If you decide to trade EPAM Systems, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.


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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.