Yahoo Finance Why Pegasystems Inc.'s (NASDAQ:PEGA) CEO Pay Matters To You
Alan Trefler became the CEO of Pegasystems Inc. (NASDAQ:PEGA) in 1983. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Pegasystems
How Does Alan Trefler's Compensation Compare With Similar Sized Companies?
According to our data, Pegasystems Inc. has a market capitalization of US$6.8b, and paid its CEO total annual compensation worth US$5.9m over the year to December 2019. We note that's an increase of 505% above last year. We think total compensation is more important but we note that the CEO salary is lower, at US$485k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. 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$7.5m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 12% of total compensation represents salary, while the remainder of 88% is other remuneration. Readers will want to know that Pegasystems pays a modest slice of remuneration through salary, as compared to the wider sector.
So Alan Trefler receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. You can see, below, how CEO compensation at Pegasystems has changed over time.
Is Pegasystems Inc. Growing?
On average over the last three years, Pegasystems Inc. has shrunk earnings per share by 108% each year (measured with a line of best fit). Its revenue is up 11% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet 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?
Most shareholders would probably be pleased with Pegasystems Inc. for providing a total return of 53% 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.
In Summary...
Remuneration for Alan Trefler is close enough to the median pay for a CEO of a similar sized company .
We feel that earnings per share have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. So we think most shareholders wouldn't be too worried about CEO compensation, which is close to the median for similar sized companies. On another note, Pegasystems has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.
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.
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.
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. Thank you for reading.
