How Should Investors Feel About Zendesk, Inc.’s (NYSE:ZEN) CEO Pay?
Mikkel Svane has been the CEO of Zendesk, Inc. (NYSE:ZEN) since 2007. First, this article will compare CEO compensation with compensation at similar sized companies. 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.
View our latest analysis for Zendesk
How Does Mikkel Svane’s Compensation Compare With Similar Sized Companies?
According to our data, Zendesk, Inc. has a market capitalization of US$5.5b, and pays its CEO total annual compensation worth US$1.9m. (This number is for the twelve months until 2016). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$364k. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO compensation was US$7.2m.
A first glance this seems like a real positive for shareholders, since Mikkel Svane is paid less than the average compensation paid by similar sized companies. 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?
On average over the last three years, Zendesk, Inc. has shrunk earnings per share by 6.2% each year. It achieved revenue growth of 38% over the last year.
The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It’s hard to reach a conclusion about business performance right now. This may be one to watch.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has Zendesk, Inc. Been A Good Investment?
I think that the total shareholder return of 94%, over three years, would leave most Zendesk, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary…
Zendesk, Inc. is currently paying its CEO below what is normal for companies of its size.
Mikkel Svane receives relatively low remuneration compared to similar sized companies. And the returns to shareholders were great, over the last few years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Zendesk (free visualization of insider trades).
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
