Is NVIDIA Corporation (NASDAQ:NVDA) Excessively Paying Its CEO?

Jensen Huang became the CEO of NVIDIA Corporation (NASDAQ:NVDA) in 1993. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for NVIDIA

How Does Jensen Huang’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that NVIDIA Corporation has a market cap of US$100b, and is paying total annual CEO compensation of US$13m. (This number is for the twelve months until 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO compensation was US$11m.

That means Jensen Huang receives fairly typical remuneration for the CEO of a large company. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance. So this free visualization of the analyst consensus on future earnings could help you make the right decision about whether to buy, sell, or hold.

The graphic below shows how CEO compensation at NVIDIA has changed from year to year.

NasdaqGS:NVDA CEO Compensation December 2nd 18
NasdaqGS:NVDA CEO Compensation December 2nd 18

Is NVIDIA Corporation Growing?

On average over the last three years, NVIDIA Corporation has grown earnings per share (EPS) by 62% each year. In the last year, its revenue is up 38%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see.

Has NVIDIA Corporation Been A Good Investment?

Most shareholders would probably be pleased with NVIDIA Corporation for providing a total return of 392% over three years. 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…

Jensen Huang is paid around what is normal the leaders of larger companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. So one could argue the CEO compensation is quite modest, if you consider company performance! Shareholders may want to check for free if NVIDIA insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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 editorial-team@simplywallst.com.