In 2017 Ajei Gopal was appointed CEO of ANSYS, Inc. (NASDAQ:ANSS). 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 Ajei Gopal's Compensation Compare With Similar Sized Companies?
Our data indicates that ANSYS, Inc. is worth US$19b, and total annual CEO compensation was reported as US$10m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$769k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. (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).
So Ajei Gopal receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see a visual representation of the CEO compensation at ANSYS, below.
Is ANSYS, Inc. Growing?
ANSYS, Inc. has increased its earnings per share (EPS) by an average of 21% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 19%.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has ANSYS, Inc. Been A Good Investment?
I think that the total shareholder return of 144%, over three years, would leave most ANSYS, Inc. shareholders smiling. 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.
Ajei Gopal is paid around what is normal the leaders of larger companies.
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Indeed, many might consider the pay rather modest, given the solid company performance! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at ANSYS.
Important note: ANSYS 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.
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