Why We Think Shareholders May Be Considering Bumping Up Dropbox, Inc.'s (NASDAQ:DBX) CEO Compensation

Key Insights

• Dropbox to hold its Annual General Meeting on 15th of May
• Total pay for CEO Drew Houston includes US$756.3k salary
• The overall pay is 86% below the industry average
• Over the past three years, Dropbox's EPS grew by 22% and over the past three years, the total shareholder return was 49%

We've discovered 2 warning signs about Dropbox. View them for free.

The solid performance at Dropbox, Inc. (NASDAQ:DBX) has been impressive and shareholders will probably be pleased to know that CEO Drew Houston has delivered. This would be kept in mind at the upcoming AGM on 15th of May which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

View our latest analysis for Dropbox

How Does Total Compensation For Drew Houston Compare With Other Companies In The Industry?

At the time of writing, our data shows that Dropbox, Inc. has a market capitalization of US$8.3b, and reported total annual CEO compensation of US$1.7m for the year to December 2024. Notably, that's an increase of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$756k.

For comparison, other companies in the American Software industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$12m. Accordingly, Dropbox pays its CEO under the industry median. What's more, Drew Houston holds US$2.3b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	US$756k	US$625k	44%
Other	US$950k	US$915k	56%
Total Compensation	US$1.7m	US$1.5m	100%

On an industry level, around 11% of total compensation represents salary and 89% is other remuneration. According to our research, Dropbox has allocated a higher percentage of pay to salary in comparison to the wider industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Dropbox, Inc.'s Growth

Dropbox, Inc.'s earnings per share (EPS) grew 22% per year over the last three years. In the last year, its revenue is up 1.9%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Dropbox, Inc. Been A Good Investment?

Boasting a total shareholder return of 49% over three years, Dropbox, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is significant) in Dropbox we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.