Yahoo Finance Shareholders May Not Be So Generous With Gen Digital Inc.'s (NASDAQ:GEN) CEO Compensation And Here's Why
Key Insights
Gen Digital will host its Annual General Meeting on 12th of September
CEO Vincent Pilette's total compensation includes salary of US$940.4k
The overall pay is 83% above the industry average
Gen Digital's three-year loss to shareholders was 4.4% while its EPS grew by 23% over the past three years
In the past three years, shareholders of Gen Digital Inc. (NASDAQ:GEN) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 12th of September. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
View our latest analysis for Gen Digital
Comparing Gen Digital Inc.'s CEO Compensation With The Industry
At the time of writing, our data shows that Gen Digital Inc. has a market capitalization of US$13b, and reported total annual CEO compensation of US$25m for the year to March 2023. Notably, that's an increase of 87% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$940k.
For comparison, other companies in the American Software industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$14m. This suggests that Vincent Pilette is paid more than the median for the industry. What's more, Vincent Pilette holds US$34m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$940k | US$886k | 4% |
Other | US$24m | US$13m | 96% |
Total Compensation | US$25m | US$14m | 100% |
Talking in terms of the industry, salary represented approximately 10% of total compensation out of all the companies we analyzed, while other remuneration made up 90% of the pie. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Vincent Pilette as compared to non-salary compensation over the one-year period examined. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Gen Digital Inc.'s Growth Numbers
Gen Digital Inc. has seen its earnings per share (EPS) increase by 23% a year over the past three years. It achieved revenue growth of 27% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Gen Digital Inc. Been A Good Investment?
With a three year total loss of 4.4% for the shareholders, Gen Digital Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
Gen Digital prefers rewarding its CEO through non-salary benefits. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Gen Digital you should be aware of, and 1 of them shouldn't be ignored.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
