Should You Worry About Microsoft Corporation’s (NASDAQ:MSFT) CEO Salary Level? - Simply Wall St

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Satya Nadella has been the CEO of Microsoft Corporation (NASDAQ:MSFT) since 2014. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. 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.

View our latest analysis for Microsoft

How Does Satya Nadella’s Compensation Compare With Similar Sized Companies?

Our data indicates that Microsoft Corporation is worth US$967b, and total annual CEO compensation is US$26m. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.5m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$12m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Thus we can conclude that Satya Nadella receives more in total compensation than the median of a group of large companies in the same market as Microsoft Corporation. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Microsoft, below.

NasdaqGS:MSFT CEO Compensation, May 28th 2019

Is Microsoft Corporation Growing?

On average over the last three years, Microsoft Corporation has grown earnings per share (EPS) by 21% each year (using a line of best fit). It achieved revenue growth of 15% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Microsoft Corporation Been A Good Investment?

Boasting a total shareholder return of 156% over three years, Microsoft Corporation 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…

We compared the total CEO remuneration paid by Microsoft Corporation, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Microsoft shares (free trial).

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.

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.

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.

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