Chuck Robbins has been the CEO of Cisco Systems, Inc. (NASDAQ:CSCO) since 2015. 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Chuck Robbins’s Compensation Compare With Similar Sized Companies?
According to our data, Cisco Systems, Inc. has a market capitalization of US$195b, and paid its CEO total annual compensation worth US$26m over the year to July 2019. While we always look at total compensation first, we note that the salary component is less, at US$1.3m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. 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. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
It would therefore appear that Cisco Systems, Inc. pays Chuck Robbins more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Cisco Systems has changed over time.
Is Cisco Systems, Inc. Growing?
Over the last three years Cisco Systems, Inc. has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit). In the last year, its revenue is up 3.5%.
This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.
Has Cisco Systems, Inc. Been A Good Investment?
I think that the total shareholder return of 63%, over three years, would leave most Cisco Systems, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Cisco Systems, Inc. pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cisco Systems (free visualization of insider trades).
If you want to buy a stock that is better than Cisco Systems, this free list of high return, low debt companies is a great place to look.
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