How Much Is NVIDIA's (NASDAQ:NVDA) CEO Getting Paid?

This article will reflect on the compensation paid to Jensen Huang who has served as CEO of NVIDIA Corporation (NASDAQ:NVDA) since 1993. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for NVIDIA.

View our latest analysis for NVIDIA

How Does Total Compensation For Jensen Huang Compare With Other Companies In The Industry?

At the time of writing, our data shows that NVIDIA Corporation has a market capitalization of US$328b, and reported total annual CEO compensation of US$11m for the year to January 2020. That's a notable decrease of 16% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$997k.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$10m. This suggests that NVIDIA remunerates its CEO largely in line with the industry average. Moreover, Jensen Huang also holds US$11b worth of NVIDIA stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. NVIDIA pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at NVIDIA Corporation's Growth Numbers

NVIDIA Corporation has seen its earnings per share (EPS) increase by 12% a year over the past three years. It achieved revenue growth of 47% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has NVIDIA Corporation Been A Good Investment?

We think that the total shareholder return of 190%, over three years, would leave most NVIDIA Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As previously discussed, Jensen is compensated close to the median for companies of its size, and which belong to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for NVIDIA that you should be aware of before investing.

Important note: NVIDIA is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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