Yahoo Finance Is Splunk Inc. (NASDAQ:SPLK) Excessively Paying Its CEO?
Doug Merritt has been the CEO of Splunk Inc. (NASDAQ:SPLK) since 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big 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.
Check out our latest analysis for Splunk
How Does Doug Merritt's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Splunk Inc. has a market cap of US$19b, and reported total annual CEO compensation of US$14m for the year to January 2019. While we always look at total compensation first, we note that the salary component is less, at US$650k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. 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.
So Doug Merritt receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Splunk has changed from year to year.
Is Splunk Inc. Growing?
Splunk Inc. has increased its earnings per share (EPS) by an average of 14% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 36%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has Splunk Inc. Been A Good Investment?
I think that the total shareholder return of 112%, over three years, would leave most Splunk Inc. shareholders smiling. 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.
In Summary...
Doug Merritt is paid around the same as most CEOs of large companies.
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Indeed, many might consider the pay rather modest, given the solid company performance! Shareholders may want to check for free if Splunk insiders are buying or selling shares.
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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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.
