François Locoh-Donou has been the CEO of F5 Networks, Inc. (NASDAQ:FFIV) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for F5 Networks.
Comparing F5 Networks, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that F5 Networks, Inc. has a market capitalization of US$7.4b, and reported total annual CEO compensation of US$9.5m for the year to September 2019. That's a notable increase of 38% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$850k.
On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$9.5m. This suggests that F5 Networks remunerates its CEO largely in line with the industry average. What's more, François Locoh-Donou holds US$7.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 24% of total compensation represents salary and 76% is other remuneration. In F5 Networks' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at F5 Networks, Inc.'s Growth Numbers
Over the last three years, F5 Networks, Inc. has shrunk its earnings per share by 4.2% per year. It achieved revenue growth of 5.0% over the last year.
Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has F5 Networks, Inc. Been A Good Investment?
F5 Networks, Inc. has not done too badly by shareholders, with a total return of 0.9%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
As previously discussed, François is compensated close to the median for companies of its size, and which belong to the same industry. According to our analysis, F5 Networks is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for F5 Networks that investors should think about before committing capital to this stock.
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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