Key Insights

• Dropbox will host its Annual General Meeting on 16th of May
• CEO Drew Houston's total compensation includes salary of US$625.0k
• The total compensation is 83% less than the average for the industry
• Over the past three years, Dropbox's EPS grew by 81% and over the past three years, the total loss to shareholders 5.3%

Shareholders may be wondering what CEO Drew Houston plans to do to improve the less than great performance at Dropbox, Inc. (NASDAQ:DBX) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 16th of May. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

How Does Total Compensation For Drew Houston Compare With Other Companies In The Industry?

Our data indicates that Dropbox, Inc. has a market capitalization of US$7.9b, and total annual CEO compensation was reported as US$1.5m for the year to December 2023. That's a notable increase of 34% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$625k.

For comparison, other companies in the American Software industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$9.3m. Accordingly, Dropbox pays its CEO under the industry median. Furthermore, Drew Houston directly owns US$2.0b worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. Dropbox pays out 41% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Dropbox, Inc.'s Growth Numbers

Dropbox, Inc. has seen its earnings per share (EPS) increase by 81% a year over the past three years. Its revenue is up 7.6% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Dropbox, Inc. Been A Good Investment?

Given the total shareholder loss of 5.3% over three years, many shareholders in Dropbox, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The lacklustre share price returns is rather divergent to the robust growth in EPS, suggesting that there may be other factors weighing on it apart from fundamentals. Shareholders will get the chance to question the board on key concerns and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Dropbox you should be aware of, and 1 of them is potentially serious.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.