Is Medidata Solutions, Inc.’s (NASDAQ:MDSO) CEO Paid At A Competitive Rate?

Tarek Sherif has been the CEO of Medidata Solutions, Inc. (NASDAQ:MDSO) since 2001. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

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How Does Tarek Sherif’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Medidata Solutions, Inc. has a market cap of US$3.9b, and is paying total annual CEO compensation of US$9.3m. (This number is for the twelve months until 2017). While we always look at total compensation first, we note that the salary component is less, at US$570k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.1m.

It would therefore appear that Medidata Solutions, Inc. pays Tarek Sherif more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Medidata Solutions has changed from year to year.

NasdaqGS:MDSO CEO Compensation January 16th 19
NasdaqGS:MDSO CEO Compensation January 16th 19

Is Medidata Solutions, Inc. Growing?

Over the last three years Medidata Solutions, Inc. has grown its earnings per share (EPS) by an average of 42% per year (using a line of best fit). In the last year, its revenue is up 16%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Medidata Solutions, Inc. Been A Good Investment?

Boasting a total shareholder return of 54% over three years, Medidata Solutions, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We compared the total CEO remuneration paid by Medidata Solutions, Inc., and compared it to remuneration at a group of similar sized 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. 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. Shareholders may want to check for free if Medidata Solutions insiders are buying or selling shares.

Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.