Ajay Banga became the CEO of Mastercard Incorporated (NYSE:MA) in 2010. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
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$285b, and reported total annual CEO compensation of US$20m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the 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 Mastercard Incorporated pays Ajay Banga 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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Mastercard has changed from year to year.
Is Mastercard Incorporated Growing?
Over the last three years Mastercard Incorporated has grown its earnings per share (EPS) by an average of 23% per year (using a line of best fit). It achieved revenue growth of 13% over the last year.
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 Mastercard Incorporated Been A Good Investment?
I think that the total shareholder return of 172%, over three years, would leave most Mastercard Incorporated 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 Mastercard Incorporated pays its CEO, and compared it to the amount paid by 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. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Mastercard (free visualization of insider trades).
Important note: Mastercard may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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