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This article will reflect on the compensation paid to Jeff Bezos who has served as CEO of Amazon.com, Inc. (NASDAQ:AMZN) since 1996. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Amazon.com.
Comparing Amazon.com, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Amazon.com, Inc. has a market capitalization of US$1.6t, and reported total annual CEO compensation of US$1.7m for the year to December 2019. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$82k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$6.7m. In other words, Amazon.com pays its CEO lower than the industry median. What's more, Jeff Bezos holds US$178b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. Amazon.com has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Amazon.com, Inc.'s Growth Numbers
Over the past three years, Amazon.com, Inc. has seen its earnings per share (EPS) grow by 58% per year. In the last year, its revenue is up 23%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Amazon.com, Inc. Been A Good Investment?
We think that the total shareholder return of 217%, over three years, would leave most Amazon.com, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Amazon.com primarily uses non-salary benefits to reward its CEO. As we touched on above, Amazon.com, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Since earnings growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Jeff's performance.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Amazon.com that investors should think about before committing capital to this stock.
Important note: Amazon.com 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.
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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