U.S. markets open in 5 hours 25 minutes

Is QUALCOMM Incorporated's (NASDAQ:QCOM) CEO Pay Fair?

Simply Wall St

Steve Mollenkopf became the CEO of QUALCOMM Incorporated (NASDAQ:QCOM) in 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. 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.

View our latest analysis for QUALCOMM

How Does Steve Mollenkopf's Compensation Compare With Similar Sized Companies?

Our data indicates that QUALCOMM Incorporated is worth US$102b, and total annual CEO compensation was reported as US$23m for the year to September 2019. That's a notable increase of 15% on last year. While we always look at total compensation first, we note that the salary component is less, at US$1.2m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. 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. (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).

Thus we can conclude that Steve Mollenkopf receives more in total compensation than the median of a group of large companies in the same market as QUALCOMM Incorporated. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at QUALCOMM has changed from year to year.

NasdaqGS:QCOM CEO Compensation, February 6th 2020

Is QUALCOMM Incorporated Growing?

On average over the last three years, QUALCOMM Incorporated has shrunk earnings per share by 17% each year (measured with a line of best fit). Its revenue is up 7.3% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has QUALCOMM Incorporated Been A Good Investment?

I think that the total shareholder return of 93%, over three years, would leave most QUALCOMM Incorporated shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We examined the amount QUALCOMM Incorporated pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years. However, we can't argue with the strong returns to shareholders, over the same time period. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. So you may want to check if insiders are buying QUALCOMM shares with their own money (free access).

Important note: QUALCOMM 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.

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.

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. Thank you for reading.