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Andrew Wilson has been the CEO of Electronic Arts Inc. (NASDAQ:EA) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Electronic Arts pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Andrew Wilson Compare With Other Companies In The Industry?
At the time of writing, our data shows that Electronic Arts Inc. has a market capitalization of US$40b, and reported total annual CEO compensation of US$21m for the year to March 2020. We note that's an increase of 17% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$14m. Hence, we can conclude that Andrew Wilson is remunerated higher than the industry median. What's more, Andrew Wilson holds US$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. It's interesting to note that Electronic Arts allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Electronic Arts Inc.'s Growth Numbers
Electronic Arts Inc. has seen its earnings per share (EPS) increase by 48% a year over the past three years. In the last year, its revenue is up 12%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Electronic Arts Inc. Been A Good Investment?
Electronic Arts Inc. has served shareholders reasonably well, with a total return of 24% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we noted earlier, Electronic Arts pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the earnings per share growth over three years is certainly impressive. We also think investor returns are steady over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Electronic Arts (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.
Important note: Electronic Arts is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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