In 1991 Bobby Kotick was appointed CEO of Activision Blizzard, Inc. (NASDAQ:ATVI). This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Bobby Kotick's Compensation Compare With Similar Sized Companies?
According to our data, Activision Blizzard, Inc. has a market capitalization of US$46b, and paid its CEO total annual compensation worth US$31m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.8m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be 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.
It would therefore appear that Activision Blizzard, Inc. pays Bobby Kotick 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 Activision Blizzard has changed from year to year.
Is Activision Blizzard, Inc. Growing?
Over the last three years Activision Blizzard, Inc. has grown its earnings per share (EPS) by an average of 24% per year (using a line of best fit). Its revenue is down 3.9% over last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Activision Blizzard, Inc. Been A Good Investment?
I think that the total shareholder return of 53%, over three years, would leave most Activision Blizzard, Inc. shareholders smiling. 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.
We examined the amount Activision Blizzard, Inc. pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Activision Blizzard.
Important note: Activision Blizzard 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 email@example.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.