How Should Investors React To Activision Blizzard, Inc.’s (NASDAQ:ATVI) CEO Pay?

Bobby Kotick became the CEO of Activision Blizzard, Inc. (NASDAQ:ATVI) in 1991. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. 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.

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

See our latest analysis for Activision Blizzard

How Does Bobby Kotick’s Compensation Compare With Similar Sized Companies?

Our data indicates that Activision Blizzard, Inc. is worth US$33b, and total annual CEO compensation is US$31m. (This figure is for the year to December 2018). That’s a modest increase of 7.5% on the prior year year. While we always look at total compensation first, we note that the salary component is less, at US$1.8m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$12m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

As you can see, Bobby Kotick is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Activision Blizzard, Inc. is paying too much. 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 Activision Blizzard has changed from year to year.

NasdaqGS:ATVI CEO Compensation, May 22nd 2019
NasdaqGS:ATVI CEO Compensation, May 22nd 2019

Is Activision Blizzard, Inc. Growing?

Activision Blizzard, Inc. has increased its earnings per share (EPS) by an average of 12% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 1.4%.

This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.

Has Activision Blizzard, Inc. Been A Good Investment?

With a total shareholder return of 14% over three years, Activision Blizzard, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We examined the amount Activision Blizzard, Inc. 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.

Importantly, though, the company has impressed with its earnings per share growth, over three years. We also note that, over the same time frame, shareholder returns haven’t been bad. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. Shareholders may want to check for free if Activision Blizzard insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.