Shareholders May Not Be So Generous With Gen Digital Inc.'s (NASDAQ:GEN) CEO Compensation And Here's Why

Key Insights

• Gen Digital's Annual General Meeting to take place on 12th of September
• Total pay for CEO Vincent Pilette includes US$940.4k salary
• Total compensation is 83% above industry average
• Gen Digital's three-year loss to shareholders was 4.4% while its EPS grew by 23% over the past three years

As many shareholders of Gen Digital Inc. (NASDAQ:GEN) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 12th of September could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Gen Digital

How Does Total Compensation For Vincent Pilette Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gen Digital Inc. has a market capitalization of US$13b, and reported total annual CEO compensation of US$25m for the year to March 2023. We note that's an increase of 87% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$940k.

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$14m. Hence, we can conclude that Vincent Pilette is remunerated higher than the industry median. What's more, Vincent Pilette holds US$34m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$940k	US$886k	4%
Other	US$24m	US$13m	96%
Total Compensation	US$25m	US$14m	100%

Talking in terms of the industry, salary represented approximately 10% of total compensation out of all the companies we analyzed, while other remuneration made up 90% of the pie. Gen Digital has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Gen Digital Inc.'s Growth Numbers

Gen Digital Inc.'s earnings per share (EPS) grew 23% per year over the last three years. It achieved revenue growth of 27% over the last year.

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 EPS improvement certainly points to the kind of growth we like to see. 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 Gen Digital Inc. Been A Good Investment?

Since shareholders would have lost about 4.4% over three years, some Gen Digital Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Gen Digital prefers rewarding its CEO through non-salary benefits. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Gen Digital (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

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.