Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Doug Merritt became the CEO of Splunk Inc. (NASDAQ:SPLK) in 2015. 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 process should give us an idea about how appropriately the CEO is paid.
How Does Doug Merritt's Compensation Compare With Similar Sized Companies?
According to our data, Splunk Inc. has a market capitalization of US$20b, and pays its CEO total annual compensation worth US$9.2m. (This is based on the year to January 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$475k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
So Doug Merritt 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 Splunk has changed over time.
Is Splunk Inc. Growing?
Over the last three years Splunk Inc. has grown its earnings per share (EPS) by an average of 11% per year (using a line of best fit). It achieved revenue growth of 38% over the last year.
This demonstrates that the company has been improving recently. A good result. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.
Has Splunk Inc. Been A Good Investment?
I think that the total shareholder return of 180%, over three years, would leave most Splunk Inc. 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.
Doug Merritt is paid around the same as most CEOs of large companies.
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Indeed, many might consider the pay rather modest, given the solid company performance! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Splunk (free visualization of insider trades).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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 firstname.lastname@example.org. 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.