U.S. markets closed

Is Workday, Inc.'s (NASDAQ:WDAY) CEO Being Overpaid?

Simply Wall St

Aneel Bhusri became the CEO of Workday, Inc. (NASDAQ:WDAY) in 2009. This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Workday

How Does Aneel Bhusri's Compensation Compare With Similar Sized Companies?

Our data indicates that Workday, Inc. is worth US$31b, and total annual CEO compensation was reported as US$9.8m for the year to January 2019. While we always look at total compensation first, we note that the salary component is less, at US$65k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the 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 Workday stands. Speaking on an industry level, we can see that nearly 13% of total compensation represents salary, while the remainder of 87% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Workday paid Aneel Bhusri a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation.

That means Aneel Bhusri receives fairly typical remuneration for the CEO of a large company. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see a visual representation of the CEO compensation at Workday, below.

NasdaqGS:WDAY CEO Compensation April 8th 2020

Is Workday, Inc. Growing?

On average over the last three years, Workday, Inc. has shrunk earnings per share by 8.1% each year (measured with a line of best fit). Its revenue is up 29% over last year.

The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.

Has Workday, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Workday, Inc. for providing a total return of 58% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Remuneration for Aneel Bhusri is close enough to the median pay for a CEO of a large company .

While the growth could be better, the shareholder returns are clearly good. So considering most shareholders would be happy, we'd say the CEO pay is appropriate. CEO compensation is an important area to keep your eyes on, but we've also identified 4 warning signs for Workday (1 is potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.