In 2015 Omar Ishrak was appointed CEO of Medtronic plc (NYSE:MDT). This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. 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 Omar Ishrak's Compensation Compare With Similar Sized Companies?
According to our data, Medtronic plc has a market capitalization of US$151b, and paid its CEO total annual compensation worth US$18m over the year to April 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$1.7m. 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 took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be 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).
As you can see, Omar Ishrak is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Medtronic plc is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Medtronic has changed over time.
Is Medtronic plc Growing?
On average over the last three years, Medtronic plc has grown earnings per share (EPS) by 4.0% each year (using a line of best fit). It achieved revenue growth of 1.7% over the last year.
I'd prefer higher revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Shareholders might be interested in this free visualization of analyst forecasts.
Has Medtronic plc Been A Good Investment?
Most shareholders would probably be pleased with Medtronic plc for providing a total return of 51% 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 Medtronic plc pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years returns to investors have been great, though we might have liked stronger business growth. Considering this fine result for investors, we daresay the CEO compensation might be apt. Shareholders may want to check for free if Medtronic insiders are buying or selling shares.
Important note: Medtronic 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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. Thank you for reading.