Most Shareholders Will Probably Agree With Okta, Inc.'s (NASDAQ:OKTA) CEO Compensation

By
Simply Wall St
Published
June 10, 2021
NasdaqGS:OKTA

Under the guidance of CEO Todd McKinnon, Okta, Inc. (NASDAQ:OKTA) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 17 June 2021. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for Okta

Comparing Okta, Inc.'s CEO Compensation With the industry

According to our data, Okta, Inc. has a market capitalization of US$34b, and paid its CEO total annual compensation worth US$12m over the year to January 2021. Notably, that's an increase of 34% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$306k.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$12m. So it looks like Okta compensates Todd McKinnon in line with the median for the industry. Furthermore, Todd McKinnon directly owns US$1.2b worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary US$306k US$306k 3%
Other US$12m US$8.7m 97%
Total CompensationUS$12m US$9.0m100%

Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. Investors may find it interesting that Okta paid a marginal salary to Todd McKinnon, over the past year, focusing on non-salary compensation instead. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NasdaqGS:OKTA CEO Compensation June 11th 2021

A Look at Okta, Inc.'s Growth Numbers

Over the last three years, Okta, Inc. has shrunk its earnings per share by 26% per year. In the last year, its revenue is up 40%.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Okta, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Okta, Inc. for providing a total return of 308% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Okta primarily uses non-salary benefits to reward its CEO. Some shareholders will be pleased by the relatively good results, however, the results could still be improved. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Okta that you should be aware of before investing.

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.

Promoted
When trading Okta or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.


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. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is a financial technology startup focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of equity analysts with a public, market-beating track record.