Tom Leighton has been the CEO of Akamai Technologies, Inc. (NASDAQ:AKAM) since 2013. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Tom Leighton's Compensation Compare With Similar Sized Companies?
According to our data, Akamai Technologies, Inc. has a market capitalization of US$16b, and paid its CEO total annual compensation worth US$11m over the year to December 2019. That's less than last year. While we always look at total compensation first, we note that the salary component is less, at US$1.0. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$12m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Akamai Technologies stands. On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Akamai Technologies has chosen to walk a down a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year.
That means Tom Leighton receives fairly typical remuneration for the CEO of a large company. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see, below, how CEO compensation at Akamai Technologies has changed over time.
Is Akamai Technologies, Inc. Growing?
Akamai Technologies, Inc. has seen earnings per share (EPS) move positively by an average of 27% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 7.2%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has Akamai Technologies, Inc. Been A Good Investment?
I think that the total shareholder return of 112%, over three years, would leave most Akamai Technologies, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Remuneration for Tom Leighton is close enough to the median pay for a CEO of a large company .
Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. On another note, we've spotted 1 warning sign for Akamai Technologies that investors should look into moving forward.
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.
Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.