In 1983 Alan Trefler was appointed CEO of Pegasystems Inc (NASDAQ:PEGA). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Alan Trefler’s Compensation Compare With Similar Sized Companies?
Our data indicates that Pegasystems Inc is worth US$4.3b, and total annual CEO compensation is US$880k. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$470k. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO compensation was US$4.9m.
A first glance this seems like a real positive for shareholders, since Alan Trefler is paid less than the average compensation paid by similar sized companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Pegasystems has changed from year to year.
Is Pegasystems Inc Growing?
Over the last three years Pegasystems Inc has shrunk its earnings per share by an average of 45% per year. It achieved revenue growth of 1.0% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Pegasystems Inc Been A Good Investment?
I think that the total shareholder return of 88%, over three years, would leave most Pegasystems Inc shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO is paid more than is normal for a company of its size.
Pegasystems Inc is currently paying its CEO below what is normal for companies of its size.
Alan Trefler is paid less than CEOs of similar size companies. While the company isn’t growing on our analysis, shareholder returns have been good in recent years. Although we could see higher EPS growth, we’d argue the remuneration is not an issue, based on these observations. Whatever your view on compensation, you might want to check if insiders are buying or selling Pegasystems shares (free trial).
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.