In 2007 Mikkel Svane was appointed CEO of Zendesk, Inc. (NYSE:ZEN). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Mikkel Svane's Compensation Compare With Similar Sized Companies?
According to our data, Zendesk, Inc. has a market capitalization of US$9.4b, and paid its CEO total annual compensation worth US$3.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$420k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. 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$6.4m.
Most shareholders would consider it a positive that Mikkel Svane takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Zendesk has changed from year to year.
Is Zendesk, Inc. Growing?
Zendesk, Inc. has reduced its earnings per share by an average of 13% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 38%.
The reduction in earnings per share, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.
Has Zendesk, Inc. Been A Good Investment?
I think that the total shareholder return of 248%, over three years, would leave most Zendesk, 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.
It looks like Zendesk, Inc. pays its CEO less than similar sized companies.
Mikkel Svane is paid less than what is normal at similar size companies, and the total shareholder return has been pleasing over the last three years. Although we could see higher growth, we'd argue the remuneration is modest, based on these observations. Whatever your view on compensation, you might want to check if insiders are buying or selling Zendesk shares (free trial).
Important note: Zendesk 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.