Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Gary Steele became the CEO of Proofpoint, Inc. (NASDAQ:PFPT) in 2002. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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 Gary Steele's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Proofpoint, Inc. has a market cap of US$7.0b, and is paying total annual CEO compensation of US$65m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$497k. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.9m.
As you can see, Gary Steele is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Proofpoint, Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Proofpoint has changed from year to year.
Is Proofpoint, Inc. Growing?
Proofpoint, Inc. has increased its earnings per share (EPS) by an average of 17% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 34%.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Proofpoint, Inc. Been A Good Investment?
Boasting a total shareholder return of 85% over three years, Proofpoint, Inc. has done well by shareholders. 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.
We compared the total CEO remuneration paid by Proofpoint, Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Proofpoint shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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.