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Is Amazon.com, Inc.'s (NASDAQ:AMZN) CEO Paid Enough Relative To Peers?

Jeff Bezos became the CEO of Amazon.com, Inc. (NASDAQ:AMZN) in 1996. This analysis aims first to contrast CEO... Read More...

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jeff Bezos became the CEO of Amazon.com, Inc. (NASDAQ:AMZN) in 1996. 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 process should give us an idea about how appropriately the CEO is paid.” data-reactid=”18″>Jeff Bezos became the CEO of Amazon.com, Inc. (NASDAQ:AMZN) in 1996. 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 process should give us an idea about how appropriately the CEO is paid.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=" View our latest analysis for Amazon.com ” data-reactid=”19″>View our latest analysis for Amazon.com

How Does Jeff Bezos’s Compensation Compare With Similar Sized Companies?

According to our data, Amazon.com, Inc. has a market capitalization of US$906b, and paid its CEO total annual compensation worth US$1.7m over the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$82k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be 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).

Most shareholders would consider it a positive that Jeff Bezos takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Amazon.com has changed from year to year.

NasdaqGS:AMZN CEO Compensation, January 28th 2020

Is Amazon.com, Inc. Growing?

Amazon.com, Inc. has increased its earnings per share (EPS) by an average of 66% a year, over the last three years (using a line of best fit). It achieved revenue growth of 20% over the last year.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.” data-reactid=”38″>This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Amazon.com, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Amazon.com, Inc. for providing a total return of 120% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

It looks like Amazon.com, Inc. pays its CEO less than the average at large companies.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Jeff Bezos deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Amazon.com.” data-reactid=”43″>Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Jeff Bezos deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Amazon.com.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies. ” data-reactid=”44″>Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If you spot an error that warrants correction, please contact the editor at [email protected]. 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.” data-reactid=”45″>If you spot an error that warrants correction, please contact the editor at [email protected]. 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.

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