Does International Business Machines Corporation's (NYSE:IBM) CEO Salary Compare Well With Others?

Ginni Rometty became the CEO of International Business Machines Corporation (NYSE:IBM) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for International Business Machines

How Does Ginni Rometty's Compensation Compare With Similar Sized Companies?

According to our data, International Business Machines Corporation has a market capitalization of US$125b, and pays its CEO total annual compensation worth US$18m. (This number is for the twelve months until December 2018). That's below the compensation, last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.6m. When we examined a group of companies with market caps over US$8.0b, we found that their 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).

As you can see, Ginni Rometty is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean International Business Machines Corporation is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at International Business Machines has changed over time.

Is International Business Machines Corporation Growing?

International Business Machines Corporation has reduced its earnings per share by an average of 21% a year, over the last three years (measured with a line of best fit). Its revenue is down -1.7% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has International Business Machines Corporation Been A Good Investment?

International Business Machines Corporation has not done too badly by shareholders, with a total return of 6.3%, over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We examined the amount International Business Machines Corporation pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

While shareholder returns are acceptable, they don't delight. So you may want to delve deeper, because we don't think the CEO pay is too low. Shareholders may want to check for free if International Business Machines insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist of interesting companies.

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.

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. Thank you for reading.