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.
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.
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.
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.
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.
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