Ajay Banga has been the CEO of Mastercard Incorporated (NYSE:MA) since 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big 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 process should give us an idea about how appropriately the CEO is paid.
How Does Ajay Banga’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Mastercard Incorporated has a market cap of US$278b, and is paying total annual CEO compensation of US$20m. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.3m. 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. 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, Ajay Banga is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Mastercard Incorporated is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Mastercard has changed from year to year.
Is Mastercard Incorporated Growing?
Mastercard Incorporated has increased its earnings per share (EPS) by an average of 21% a year, over the last three years (using a line of best fit). It achieved revenue growth of 13% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.
Has Mastercard Incorporated Been A Good Investment?
Most shareholders would probably be pleased with Mastercard Incorporated for providing a total return of 192% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at Mastercard Incorporated with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Mastercard shares with their own money (free access).
If you want to buy a stock that is better than Mastercard, this free list of high return, low debt companies is a great place to look.
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