Here's Why Shareholders May Want To Be Cautious With Increasing Motorola Solutions, Inc.'s (NYSE:MSI) CEO Pay Packet

Key Insights

• Motorola Solutions' Annual General Meeting to take place on 14th of May
• Salary of US$1.35m is part of CEO Greg Brown's total remuneration
• The total compensation is 514% higher than the average for the industry
• Motorola Solutions' EPS grew by 12% over the past three years while total shareholder return over the past three years was 85%

Under the guidance of CEO Greg Brown, Motorola Solutions, Inc. (NYSE:MSI) has performed reasonably well recently. As shareholders go into the upcoming AGM on 14th of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for Motorola Solutions

How Does Total Compensation For Greg Brown Compare With Other Companies In The Industry?

At the time of writing, our data shows that Motorola Solutions, Inc. has a market capitalization of US$60b, and reported total annual CEO compensation of US$28m for the year to December 2023. 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$1.4m.

For comparison, other companies in the American Communications industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$4.6m. Hence, we can conclude that Greg Brown is remunerated higher than the industry median. Moreover, Greg Brown also holds US$153m worth of Motorola Solutions stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.4m	US$1.3m	5%
Other	US$27m	US$20m	95%
Total Compensation	US$28m	US$21m	100%

Talking in terms of the industry, salary represented approximately 24% of total compensation out of all the companies we analyzed, while other remuneration made up 76% of the pie. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Motorola Solutions paid Greg Brown a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Motorola Solutions, Inc.'s Growth

Motorola Solutions, Inc. has seen its earnings per share (EPS) increase by 12% a year over the past three years. In the last year, its revenue is up 8.6%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Motorola Solutions, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Motorola Solutions, Inc. for providing a total return of 85% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Motorola Solutions prefers rewarding its CEO through non-salary benefits. Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

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 2 warning signs for Motorola Solutions that investors should look into moving forward.

Important note: Motorola Solutions 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. 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.