Gary Steele has been the CEO of Proofpoint, Inc. (NASDAQ:PFPT) since 2002. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Gary Steele's Compensation Compare With Similar Sized Companies?
According to our data, Proofpoint, Inc. has a market capitalization of US$6.9b, and paid its CEO total annual compensation worth US$65m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$497k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.5m.
It would therefore appear that Proofpoint, Inc. pays Gary Steele more than the median CEO remuneration at companies of a similar size, 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.
The graphic below shows how CEO compensation at Proofpoint has changed from year to year.
Is Proofpoint, Inc. Growing?
Proofpoint, Inc. has increased its earnings per share (EPS) by an average of 5.9% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 27%.
It's hard to interpret the strong revenue growth as anything other than a positive. Combined with modest EPS growth, we get a good impression of the company. I wouldn't say this is necessarily top notch growth, but it is certainly promising. Shareholders might be interested in this free visualization of analyst forecasts.
Has Proofpoint, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Proofpoint, Inc. for providing a total return of 51% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
We compared total CEO remuneration at Proofpoint, 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.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Proofpoint shares with their own money (free access).
Important note: Proofpoint 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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