Yahoo Finance Does Pegasystems Inc.'s (NASDAQ:PEGA) CEO Salary Reflect Performance?
Alan Trefler has been the CEO of Pegasystems Inc. (NASDAQ:PEGA) since 1983. First, this article will compare CEO compensation with compensation at similar sized companies. 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.
Check out our latest analysis for Pegasystems
How Does Alan Trefler's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Pegasystems Inc. has a market cap of US$6.0b, and reported total annual CEO compensation of US$981k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$485k. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.9m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. 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 62% per year (measured with a line of best fit). Revenue was pretty flat on last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Pegasystems Inc. Been A Good Investment?
Boasting a total shareholder return of 145% over three years, Pegasystems 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.
In Summary...
It looks like Pegasystems Inc. pays its CEO less than similar sized companies.
It's well worth noting that while Alan Trefler is paid less than most company leaders (at similar sized companies), there isn't much EPS growth. Having said that, returns to shareholders have been great. So, while it would be nice to have EPS growth, on our analysis the CEO compensation is not an issue. Shareholders may want to check for free if Pegasystems insiders are buying or selling shares.
Important note: Pegasystems may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
