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Is Take-Two Interactive Software, Inc. (NASDAQ:TTWO) Excessively Paying Its CEO?

Simply Wall St

Strauss Zelnick has been the CEO of Take-Two Interactive Software, Inc. (NASDAQ:TTWO) since 2011. First, this article will compare CEO compensation with compensation at 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.

Check out our latest analysis for Take-Two Interactive Software

How Does Strauss Zelnick's Compensation Compare With Similar Sized Companies?

According to our data, Take-Two Interactive Software, Inc. has a market capitalization of US$13b, and paid its CEO total annual compensation worth US$110k over the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$12m. (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).

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Take-Two Interactive Software stands. Speaking on an industry level, we can see that nearly 38% of total compensation represents salary, while the remainder of 62% is other remuneration. Take-Two Interactive Software has chosen to walk a down a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year.

Most shareholders would consider it a positive that Strauss Zelnick takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. The graphic below shows how CEO compensation at Take-Two Interactive Software has changed from year to year.

NasdaqGS:TTWO CEO Compensation April 1st 2020

Is Take-Two Interactive Software, Inc. Growing?

Over the last three years Take-Two Interactive Software, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 46% per year (using a line of best fit). It achieved revenue growth of 11% over the last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. It could be important to check this free visual depiction of what analysts expect for the future.

Has Take-Two Interactive Software, Inc. Been A Good Investment?

Boasting a total shareholder return of 105% over three years, Take-Two Interactive Software, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Take-Two Interactive Software, Inc. is currently paying its CEO below what is normal for large companies.

Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Strauss Zelnick deserves a raise! It is relatively rare to see a modestly paid CEO when performance is so impressive. But it is even better if company insiders are also buying shares with their own money. Moving away from CEO compensation for the moment, we've identified 1 warning sign for Take-Two Interactive Software that you should be aware of before investing.

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.

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.

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