Is Synopsys, Inc.'s (NASDAQ:SNPS) CEO Pay Justified?
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Aart de Geus has been the CEO of Synopsys, Inc. (NASDAQ:SNPS) since 1994. This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Synopsys
How Does Aart de Geus's Compensation Compare With Similar Sized Companies?
According to our data, Synopsys, Inc. has a market capitalization of US$21b, and pays its CEO total annual compensation worth US$7.4m. (This number is for the twelve months until November 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$535k. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be 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).
Most shareholders would consider it a positive that Aart de Geus takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at Synopsys, below.
Is Synopsys, Inc. Growing?
Synopsys, Inc. has increased its earnings per share (EPS) by an average of 27% a year, over the last three years (using a line of best fit). Its revenue is up 10.0% over last year.
This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.
Has Synopsys, Inc. Been A Good Investment?
Boasting a total shareholder return of 152% over three years, Synopsys, Inc. has done well by shareholders. 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...
It appears that Synopsys, Inc. remunerates its CEO below most large companies. Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Aart de Geus deserves a raise!
It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. Shareholders may want to check for free if Synopsys insiders are buying or selling shares.
If you want to buy a stock that is better than Synopsys, this free list of high return, low debt companies is a great place to look.
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.
