What Can We Make Of SecureWorks' (NASDAQ:SCWX) CEO Compensation?

This article will reflect on the compensation paid to Mike Cote who has served as CEO of SecureWorks Corp. (NASDAQ:SCWX) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for SecureWorks.

Check out our latest analysis for SecureWorks

Comparing SecureWorks Corp.'s CEO Compensation With the industry

According to our data, SecureWorks Corp. has a market capitalization of US$1.2b, and paid its CEO total annual compensation worth US$4.5m over the year to January 2020. Notably, that's an increase of 24% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$500k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.5m. Hence, we can conclude that Mike Cote is remunerated higher than the industry median. Moreover, Mike Cote also holds US$18m worth of SecureWorks stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. In SecureWorks' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

SecureWorks Corp.'s Growth

Over the last three years, SecureWorks Corp. has shrunk its earnings per share by 11% per year. Its revenue is up 4.0% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has SecureWorks Corp. Been A Good Investment?

Boasting a total shareholder return of 57% over three years, SecureWorks Corp. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As previously discussed, Mike is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. So while we don't think, Mike is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for SecureWorks that investors should be aware of in a dynamic business environment.

Important note: SecureWorks is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.
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