Hock Tan has been the CEO of Broadcom Inc (NASDAQ:AVGO) since 2006. This analysis aims first to contrast CEO compensation with other large companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Hock Tan’s Compensation Compare With Similar Sized Companies?
Our data indicates that Broadcom Inc is worth US$93b, and total annual CEO compensation is US$103m. We note that’s an increase of 319% above 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.
It would therefore appear that Broadcom Inc pays Hock Tan more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Broadcom, below.
Is Broadcom Inc Growing?
On average over the last three years, Broadcom Inc has grown earnings per share (EPS) by 89% each year. It achieved revenue growth of 19% over the last year.
This demonstrates that the company has been improving recently. A good result. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. So this free report on the analyst consensus forecasts could help you make a master move on this stock.
Has Broadcom Inc Been A Good Investment?
Most shareholders would probably be pleased with Broadcom Inc for providing a total return of 104% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Broadcom Inc pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that 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. Even if a company pays the CEO quite generously, that doesn’t mean it’s a bad investment. Still, shareholders might want to check if insiders have been selling.
Of course Broadcom may not be the best stock to buy. So you may wish to see this free collection of other companies that have high ROE and low debt.
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 firstname.lastname@example.org.