In 2010 Dan Rosensweig was appointed CEO of Chegg, Inc. (NYSE:CHGG). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.
How Does Dan Rosensweig's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Chegg, Inc. has a market cap of US$4.5b, and reported total annual CEO compensation of US$9.1m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$987k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.
As you can see, Dan Rosensweig is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Chegg, Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Chegg has changed over time.
Is Chegg, Inc. Growing?
Chegg, Inc. has increased its earnings per share (EPS) by an average of 53% a year, over the last three years (using a line of best fit). It achieved revenue growth of 28% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has Chegg, Inc. Been A Good Investment?
Boasting a total shareholder return of 370% over three years, Chegg, 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.
We compared total CEO remuneration at Chegg, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shifting gears from CEO pay for a second, we've picked out 1 warning sign for Chegg that investors should be aware of in a dynamic business environment.
If you want to buy a stock that is better than Chegg, this free list of high return, low debt companies is a great place to look.
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