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What Can We Learn About Okta's (NASDAQ:OKTA) CEO Compensation?

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Simply Wall St
·3 min read
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This article will reflect on the compensation paid to Todd McKinnon who has served as CEO of Okta, Inc. (NASDAQ:OKTA) since 2009. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Okta.

View our latest analysis for Okta

How Does Total Compensation For Todd McKinnon Compare With Other Companies In The Industry?

Our data indicates that Okta, Inc. has a market capitalization of US$34b, and total annual CEO compensation was reported as US$9.0m for the year to January 2020. We note that's an increase of 79% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$306k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. This suggests that Okta remunerates its CEO largely in line with the industry average. Moreover, Todd McKinnon also holds US$1.4b worth of Okta stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2019

Proportion (2020)

Salary

US$306k

US$306k

3%

Other

US$8.7m

US$4.8m

97%

Total Compensation

US$9.0m

US$5.1m

100%

On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. Okta has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at Okta, Inc.'s Growth Numbers

Over the last three years, Okta, Inc. has shrunk its earnings per share by 15% per year. In the last year, its revenue is up 44%.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Okta, Inc. Been A Good Investment?

Boasting a total shareholder return of 889% over three years, Okta, Inc. has done well by shareholders. 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...

Okta primarily uses non-salary benefits to reward its CEO. As we noted earlier, Okta pays its CEO in line with similar-sized companies belonging to the same industry. Shareholder returns for the company have been strong for the last three years. At the same time, revenues are also moving northwards at a healthy pace. On a sour note, EPS growth has been negative. Overall, the company's performance hasn't been that disappointing for us to object the CEO compensation.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which is significant) in Okta we think you should know about.

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.