Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Mikkel Svane has been the CEO of Zendesk, Inc. (NYSE:ZEN) since 2007. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Mikkel Svane's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Zendesk, Inc. has a market cap of US$10b, and is paying total annual CEO compensation of US$3.3m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$420k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
Most shareholders would consider it a positive that Mikkel Svane takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at Zendesk has changed from year to year.
Is Zendesk, Inc. Growing?
Over the last three years Zendesk, Inc. has shrunk its earnings per share by an average of 6.2% per year (measured with a line of best fit). In the last year, its revenue is up 40%.
Investors should note that, over three years, earnings per share are down. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Zendesk, Inc. Been A Good Investment?
I think that the total shareholder return of 230%, over three years, would leave most Zendesk, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Zendesk, Inc. is currently paying its CEO below what is normal for large companies.
It's well worth noting that while Mikkel Svane is paid below what is normal at large companies, the returns have been very pleasing, over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Zendesk.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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.