It May Be Possible That Datadog, Inc.'s (NASDAQ:DDOG) CEO Compensation Could Get Bumped Up

Key Insights

• Datadog will host its Annual General Meeting on 5th of June
• CEO Olivier Pomel's total compensation includes salary of US$400.0k
• Total compensation is 31% below industry average
• Datadog's EPS grew by 52% over the past three years while total shareholder return over the past three years was 33%

Shareholders will probably not be disappointed by the robust results at Datadog, Inc. (NASDAQ:DDOG) recently and they will be keeping this in mind as they go into the AGM on 5th of June. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

Check out our latest analysis for Datadog

How Does Total Compensation For Olivier Pomel Compare With Other Companies In The Industry?

At the time of writing, our data shows that Datadog, Inc. has a market capitalization of US$41b, and reported total annual CEO compensation of US$12m for the year to December 2023. That's a fairly small increase of 3.5% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$400k.

In comparison with other companies in the American Software industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$17m. In other words, Datadog pays its CEO lower than the industry median. Furthermore, Olivier Pomel directly owns US$1.1b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$400k	US$396k	3%
Other	US$11m	US$11m	97%
Total Compensation	US$12m	US$11m	100%

On an industry level, around 16% of total compensation represents salary and 84% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Datadog paid Olivier Pomel a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Datadog, Inc.'s Growth

Datadog, Inc.'s earnings per share (EPS) grew 52% per year over the last three years. It achieved revenue growth of 26% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Datadog, Inc. Been A Good Investment?

Datadog, Inc. has generated a total shareholder return of 33% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Datadog prefers rewarding its CEO through non-salary benefits. While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Datadog that investors should look into moving forward.

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.

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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.