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In 2010 Dan Rosensweig was appointed CEO of Chegg, Inc. (NYSE:CHGG). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Dan Rosensweig's Compensation Compare With Similar Sized Companies?
According to our data, Chegg, Inc. has a market capitalization of US$4.7b, and pays its CEO total annual compensation worth US$9.1m. (This is based on the year to December 2018). We note that's an increase of 13% above last year. While we always look at total compensation first, we note that the salary component is less, at US$987k. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.3m.
Thus we can conclude that Dan Rosensweig receives more in total compensation than the median of a group of companies in the same market, and of similar size to Chegg, Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Chegg, below.
Is Chegg, Inc. Growing?
Chegg, Inc. has increased its earnings per share (EPS) by an average of 51% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 27%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to check this free visual depiction of what analysts expect for the future.
Has Chegg, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Chegg, Inc. for providing a total return of 709% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Chegg, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Chegg shares (free trial).
Important note: Chegg may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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 email@example.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.