Hock Tan became the CEO of Broadcom Inc. (NASDAQ:AVGO) in 2006. First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of 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?
At the time of writing our data says that Broadcom Inc. has a market cap of US$107b, and is paying total annual CEO compensation of US$5.0m. (This is based on the year to November 2018). That’s actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$1.1m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO compensation was US$11m. (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).
This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
You can see, below, how CEO compensation at Broadcom has changed over time.
Is Broadcom Inc. Growing?
On average over the last three years, Broadcom Inc. has grown earnings per share (EPS) by 99% each year (using a line of best fit). Its revenue is up 18% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Broadcom Inc. Been A Good Investment?
Most shareholders would probably be pleased with Broadcom Inc. for providing a total return of 94% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Broadcom Inc. is currently paying its CEO below what is normal for large companies. Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Hock Tan deserves a raise!
It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Broadcom.
If you want to buy a stock that is better than Broadcom, this free list of high return, low debt companies is a great place to look.
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