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Is Open Text Corporation's (NASDAQ:OTEX) CEO Pay Justified?

Simply Wall St

Mark Barrenechea became the CEO of Open Text Corporation (NASDAQ:OTEX) in 2012. First, this article will compare CEO compensation with compensation at other large 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. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Open Text

How Does Mark Barrenechea's Compensation Compare With Similar Sized Companies?

Our data indicates that Open Text Corporation is worth US$10b, and total annual CEO compensation is US$8.1m. (This is based on the year to June 2019). That's a notable increase of 13% on last year. While we always look at total compensation first, we note that the salary component is less, at US$950k. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

So Mark Barrenechea 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, below, how CEO compensation at Open Text has changed over time.

NasdaqGS:OTEX CEO Compensation, August 15th 2019

Is Open Text Corporation Growing?

Open Text Corporation has reduced its earnings per share by an average of 55% a year, over the last three years (measured with a line of best fit). Its revenue is up 1.9% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Open Text Corporation Been A Good Investment?

Open Text Corporation has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Mark Barrenechea is paid around what is normal the leaders of larger companies.

The company isn't growing earnings per share, and nor have the total returns inspired us. This contrasts with the growth in CEO remuneration. We do not think the CEO pay is a problem, but one might argue that the company should improve returns to shareholders before increasing it. Shareholders may want to check for free if Open Text 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 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.