Pat Gelsinger became the CEO of VMware, Inc. (NYSE:VMW) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

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How Does Pat Gelsinger’s Compensation Compare With Similar Sized Companies?

According to our data, VMware, Inc. has a market capitalization of US$61b, and pays its CEO total annual compensation worth US$18m. (This figure is for the year to 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

As you can see, Pat Gelsinger is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean VMware, Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at VMware has changed over time.

Is VMware, Inc. Growing?

On average over the last three years, VMware, Inc. has grown earnings per share (EPS) by 16% each year (using a line of best fit). Its revenue is up 17% over last year.

This demonstrates that the company has been improving recently. A good result. 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 VMware, Inc. Been A Good Investment?

I think that the total shareholder return of 265%, over three years, would leave most VMware, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We examined the amount VMware, Inc. pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, 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. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling VMware (free visualization of insider trades).

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.