Is Activision Blizzard Inc’s (NASDAQ:ATVI) CEO Salary Justified?

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. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

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$59.7b, and total annual CEO compensation is US$29m. That’s below the compensation, last year. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m.

Thus we can conclude that Bobby Kotick receives more in total compensation than the median of a group of large companies in the same market as Activision Blizzard Inc. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Activision Blizzard has changed over time.

NasdaqGS:ATVI CEO Compensation October 19th 18
NasdaqGS:ATVI CEO Compensation October 19th 18

Is Activision Blizzard Inc Growing?

On average over the last three years, Activision Blizzard Inc has shrunk earnings per share by 20% each year. Its revenue is up 4.7% over last year.

Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

It could be important to check this free visual depiction of what analysts expect for the future.

Has Activision Blizzard Inc Been A Good Investment?

Boasting a total shareholder return of 114% over three years, Activision Blizzard Inc has done well by shareholders. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.

In Summary…

We compared total CEO remuneration at Activision Blizzard Inc with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

However, we can’t argue with the strong returns to shareholders, over the same time period. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Activision Blizzard Inc shares (free trial).

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

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.