Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
In 2000 Kris Canekeratne was appointed CEO of Virtusa Corporation (NASDAQ:VRTU). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Kris Canekeratne's Compensation Compare With Similar Sized Companies?
According to our data, Virtusa Corporation has a market capitalization of US$1.4b, and pays its CEO total annual compensation worth US$8.8m. (This is based on the year to March 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$500k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.0m.
Thus we can conclude that Kris Canekeratne receives more in total compensation than the median of a group of companies in the same market, and of similar size to Virtusa Corporation. However, this doesn't necessarily mean the pay is too high. 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 Virtusa has changed over time.
Is Virtusa Corporation Growing?
Virtusa Corporation has reduced its earnings per share by an average of 77% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 22%.
Few shareholders would be pleased to read that earnings per share are lower over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Virtusa Corporation Been A Good Investment?
Most shareholders would probably be pleased with Virtusa Corporation for providing a total return of 59% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We examined the amount Virtusa Corporation pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
On the other hand, returns have been good, so the company is doing something right. So on this analysis we'd stop short of criticizing the level of CEO compensation. Shareholders may want to check for free if Virtusa insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
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. Thank you for reading.