How Should Investors React To Akamai Technologies, Inc.'s (NASDAQ:AKAM) CEO Pay?
In 2013 Tom Leighton was appointed CEO of Akamai Technologies, Inc. (NASDAQ:AKAM). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big 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.
See our latest analysis for Akamai Technologies
How Does Tom Leighton's Compensation Compare With Similar Sized Companies?
Our data indicates that Akamai Technologies, Inc. is worth US$15b, and total annual CEO compensation was reported as US$11m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0. 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 over US$8.0b and the median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
So Tom Leighton is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at Akamai Technologies, below.
Is Akamai Technologies, Inc. Growing?
Akamai Technologies, Inc. has increased its earnings per share (EPS) by an average of 3.7% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 6.9%.
I'd prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Shareholders might be interested in this free visualization of analyst forecasts.
Has Akamai Technologies, Inc. Been A Good Investment?
I think that the total shareholder return of 63%, over three years, would leave most Akamai Technologies, 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.
In Summary...
Tom Leighton is paid around what is normal the leaders of larger companies.
While we would like to see improved growth metrics, there is no doubt that the total returns have been great, over the last three years. So all things considered I'd venture that the CEO pay is appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Akamai Technologies shares (free trial).
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 editorial-team@simplywallst.com. 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.
