Yahoo Finance Does Electronic Arts Inc.'s (NASDAQ:EA) CEO Pay Matter?
Andrew Wilson has been the CEO of Electronic Arts Inc. (NASDAQ:EA) since 2013. This analysis aims first to contrast CEO compensation with other large 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 method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Electronic Arts
How Does Andrew Wilson's Compensation Compare With Similar Sized Companies?
According to our data, Electronic Arts Inc. has a market capitalization of US$33b, and paid its CEO total annual compensation worth US$18m over the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. 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. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
It would therefore appear that Electronic Arts Inc. pays Andrew Wilson more than the median CEO remuneration at large companies, 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 Electronic Arts has changed from year to year.
Is Electronic Arts Inc. Growing?
On average over the last three years, Electronic Arts Inc. has grown earnings per share (EPS) by 23% each year (using a line of best fit). In the last year, its revenue is down 1.6%.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.
Has Electronic Arts Inc. Been A Good Investment?
I think that the total shareholder return of 41%, over three years, would leave most Electronic Arts 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...
We compared the total CEO remuneration paid by Electronic Arts Inc., and compared it to remuneration at a group of other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Electronic Arts.
Important note: Electronic Arts 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.
