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How Does Varonis Systems' (NASDAQ:VRNS) CEO Pay Compare With Company Performance?

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·3 min read
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This article will reflect on the compensation paid to Yaki Faitelson who has served as CEO of Varonis Systems, Inc. (NASDAQ:VRNS) since 2004. This analysis will also assess whether Varonis Systems pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Varonis Systems

Comparing Varonis Systems, Inc.'s CEO Compensation With the industry

According to our data, Varonis Systems, Inc. has a market capitalization of US$3.9b, and paid its CEO total annual compensation worth US$8.5m over the year to December 2019. We note that's a small decrease of 3.2% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$560k.

On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.1m. Accordingly, our analysis reveals that Varonis Systems, Inc. pays Yaki Faitelson north of the industry median. Moreover, Yaki Faitelson also holds US$7.2m worth of Varonis Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$560k

US$560k

7%

Other

US$7.9m

US$8.2m

93%

Total Compensation

US$8.5m

US$8.8m

100%

On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. Varonis Systems pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Varonis Systems, Inc.'s Growth

Over the last three years, Varonis Systems, Inc. has shrunk its earnings per share by 60% per year. Its revenue is down 4.3% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Varonis Systems, Inc. Been A Good Investment?

Boasting a total shareholder return of 181% over three years, Varonis Systems, 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.

To Conclude...

As we touched on above, Varonis Systems, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Varonis Systems that investors should think about before committing capital to this stock.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.