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Is PTC Inc.'s (NASDAQ:PTC) CEO Overpaid Relative To Its Peers?

Simply Wall St

Jim Heppelmann has been the CEO of PTC Inc. (NASDAQ:PTC) since 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for PTC

How Does Jim Heppelmann's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that PTC Inc. has a market cap of US$7.6b, and reported total annual CEO compensation of US$50m for the year to September 2018. While we always look at total compensation first, we note that the salary component is less, at US$800k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.9m.

It would therefore appear that PTC Inc. pays Jim Heppelmann more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 a visual representation of the CEO compensation at PTC, below.

NasdaqGS:PTC CEO Compensation, October 22nd 2019

Is PTC Inc. Growing?

Over the last three years PTC Inc. has grown its earnings per share (EPS) by an average of 75% per year (using a line of best fit). In the last year, its revenue changed by just 0.2%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.

Has PTC Inc. Been A Good Investment?

I think that the total shareholder return of 43%, over three years, would leave most PTC 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...

We compared total CEO remuneration at PTC Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. So you may want to check if insiders are buying PTC shares with their own money (free access).

Important note: PTC may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.