Frank Gibeau has been the CEO of Zynga Inc. (NASDAQ:ZNGA) since 2016, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Frank Gibeau Compare With Other Companies In The Industry?
At the time of writing, our data shows that Zynga Inc. has a market capitalization of US$10b, and reported total annual CEO compensation of US$12m for the year to December 2019. Notably, that’s an increase of 18% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$14m. From this we gather that Frank Gibeau is paid around the median for CEOs in the industry. Moreover, Frank Gibeau also holds US$32m worth of Zynga stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Zynga pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
A Look at Zynga Inc.’s Growth Numbers
Zynga Inc.’s earnings per share (EPS) grew 31% per year over the last three years. It achieved revenue growth of 51% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Historical performance can sometimes be a good indicator on what’s coming up next but if you want to peer into the company’s future you might be interested in this free visualization of analyst forecasts.
Has Zynga Inc. Been A Good Investment?
Most shareholders would probably be pleased with Zynga Inc. for providing a total return of 169% over three years. 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.
As we touched on above, Zynga Inc. is currently paying a compensation that’s close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Few would be critical of the leadership, since returns have been juicy and earnings are moving in the right direction. Although the pay is close to the industry median, overall performance is excellent, so we don’t think the CEO is paid too generously. Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
CEO compensation can have a massive impact on performance, but it’s just one element. We did our research and spotted 2 warning signs for Zynga that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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