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In 2016 Matt Murphy was appointed CEO of Marvell Technology Group Ltd. (NASDAQ:MRVL). First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Matt Murphy’s Compensation Compare With Similar Sized Companies?
According to our data, Marvell Technology Group Ltd. has a market capitalization of US$16b, and pays its CEO total annual compensation worth US$7.2m. (This figure is for the year to February 2019). That’s a notable increase of 15% on last year. While we always look at total compensation first, we note that the salary component is less, at US$792k. 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.
A first glance this seems like a real positive for shareholders, since Matt Murphy is paid less than the average total compensation paid by other large companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Marvell Technology Group has changed from year to year.
Is Marvell Technology Group Ltd. Growing?
Marvell Technology Group Ltd. has increased its earnings per share (EPS) by an average of 26% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 20%.
This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.
Has Marvell Technology Group Ltd. Been A Good Investment?
Most shareholders would probably be pleased with Marvell Technology Group Ltd. for providing a total return of 166% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Marvell Technology Group Ltd. is currently paying its CEO below what is normal for large companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Matt Murphy deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. Whatever your view on compensation, you might want to check if insiders are buying or selling Marvell Technology Group shares (free trial).
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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.