In 2000 Ken Xie was appointed CEO of Fortinet, Inc. (NASDAQ:FTNT). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big 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 process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for Fortinet
How Does Ken Xie's Compensation Compare With Similar Sized Companies?
According to our data, Fortinet, Inc. has a market capitalization of US$18b, and paid its CEO total annual compensation worth US$6.8m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$625k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total 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).
Most shareholders would consider it a positive that Ken Xie takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Fortinet has changed over time.
Is Fortinet, Inc. Growing?
On average over the last three years, Fortinet, Inc. has grown earnings per share (EPS) by 90% each year (using a line of best fit). In the last year, its revenue is up 20%.
This demonstrates that the company has been improving recently. A good result. 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 Fortinet, Inc. Been A Good Investment?
I think that the total shareholder return of 246%, over three years, would leave most Fortinet, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
It looks like Fortinet, Inc. pays its CEO less than the average at large companies.
Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Ken Xie 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. Shareholders may want to check for free if Fortinet insiders are buying or selling shares.
Important note: Fortinet may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.