Here's Why We Think Palantir Technologies Inc.'s (NYSE:PLTR) CEO Compensation Looks Fair

Key Insights

• Palantir Technologies' Annual General Meeting to take place on 5th of June
• Salary of US$1.10m is part of CEO Alex Karp's total remuneration
• The overall pay is 79% below the industry average
• Over the past three years, Palantir Technologies' EPS grew by 104% and over the past three years, the total loss to shareholders 14%

The performance at Palantir Technologies Inc. (NYSE:PLTR) has been rather lacklustre of late and shareholders may be wondering what CEO Alex Karp is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 5th of June. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Palantir Technologies

How Does Total Compensation For Alex Karp Compare With Other Companies In The Industry?

Our data indicates that Palantir Technologies Inc. has a market capitalization of US$47b, and total annual CEO compensation was reported as US$3.5m for the year to December 2023. Notably, that's a decrease of 36% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

On comparing similar companies in the American Software industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$17m. In other words, Palantir Technologies pays its CEO lower than the industry median. What's more, Alex Karp holds US$1.2b 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$1.1m	US$1.1m	31%
Other	US$2.4m	US$4.4m	69%
Total Compensation	US$3.5m	US$5.5m	100%

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Palantir Technologies is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Palantir Technologies Inc.'s Growth Numbers

Over the past three years, Palantir Technologies Inc. has seen its earnings per share (EPS) grow by 104% per year. Its revenue is up 18% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Palantir Technologies Inc. Been A Good Investment?

Since shareholders would have lost about 14% over three years, some Palantir Technologies Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the strong EPS growth recently, the share price has not performed to expectations and it suggests that other factors might be driving it, apart from fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Palantir Technologies that investors should look into moving forward.

Switching gears from Palantir Technologies, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.