Should You Worry About Electronic Arts Inc.’s (NASDAQ:EA) CEO Pay Cheque?
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Andrew Wilson became the CEO of Electronic Arts Inc. (NASDAQ:EA) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big 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. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Electronic Arts
How Does Andrew Wilson’s Compensation Compare With Similar Sized Companies?
According to our data, Electronic Arts Inc. has a market capitalization of US$30b, and pays its CEO total annual compensation worth US$36m. (This number is for the twelve months until March 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
It would therefore appear that Electronic Arts Inc. pays Andrew Wilson more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Electronic Arts has changed over time.
Is Electronic Arts Inc. Growing?
Electronic Arts Inc. has increased its earnings per share (EPS) by an average of 1.8% a year, over the last three years (using a line of best fit). Its revenue is up 3.9% over last year.
I’d prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Shareholders might be interested in this free visualization of analyst forecasts.
Has Electronic Arts Inc. Been A Good Investment?
Boasting a total shareholder return of 50% over three years, Electronic Arts 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…
We examined the amount Electronic Arts Inc. pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
Over the last three years returns to investors have been great, though we might have liked stronger business growth. So, considering these tasty returns, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Electronic Arts (free visualization of insider trades).
If you want to buy a stock that is better than Electronic Arts, this free list of high return, low debt companies is a great place to look.
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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.
