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Here's Why Shareholders May Want To Be Cautious With Increasing Adobe Inc.'s (NASDAQ:ADBE) CEO Pay Packet

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Under the guidance of CEO Shantanu Narayen, Adobe Inc. (NASDAQ:ADBE) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 20 April 2021. However, some shareholders may still want to keep CEO compensation within reason.

View our latest analysis for Adobe

How Does Total Compensation For Shantanu Narayen Compare With Other Companies In The Industry?

At the time of writing, our data shows that Adobe Inc. has a market capitalization of US$243b, and reported total annual CEO compensation of US$46m for the year to November 2020. That's a notable increase of 17% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$9.6m. This suggests that Shantanu Narayen is paid more than the median for the industry. What's more, Shantanu Narayen holds US$188m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$1.0m

US$1.0m

2%

Other

US$45m

US$38m

98%

Total Compensation

US$46m

US$39m

100%

Talking in terms of the industry, salary represented approximately 11% of total compensation out of all the companies we analyzed, while other remuneration made up 89% of the pie. Investors may find it interesting that Adobe paid a marginal salary to Shantanu Narayen, over the past year, focusing on non-salary compensation instead. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Adobe Inc.'s Growth

Adobe Inc. has seen its earnings per share (EPS) increase by 45% a year over the past three years. Its revenue is up 17% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Adobe Inc. Been A Good Investment?

Most shareholders would probably be pleased with Adobe Inc. for providing a total return of 123% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Adobe prefers rewarding its CEO through non-salary benefits. The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Adobe that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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 (at) simplywallst.com.