Increases to CEO Compensation Might Be Put On Hold For Now at Teradata Corporation (NYSE:TDC)

Key Insights

• Teradata's Annual General Meeting to take place on 14th of May

• CEO Steve McMillan's total compensation includes salary of US$800.0k

• The total compensation is 111% higher than the average for the industry

• Teradata's EPS grew by 50% over the past three years while total shareholder loss over the past three years was 19%

In the past three years, the share price of Teradata Corporation (NYSE:TDC) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 14th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Teradata

Comparing Teradata Corporation's CEO Compensation With The Industry

Our data indicates that Teradata Corporation has a market capitalization of US$3.2b, and total annual CEO compensation was reported as US$15m for the year to December 2023. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$800k.

For comparison, other companies in the American Software industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$7.0m. Hence, we can conclude that Steve McMillan is remunerated higher than the industry median. What's more, Steve McMillan holds US$5.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. It's interesting to note that Teradata allocates a smaller portion of compensation to salary 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.

Teradata Corporation's Growth

Teradata Corporation's earnings per share (EPS) grew 50% per year over the last three years. In the last year, its revenue is up 2.6%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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 Teradata Corporation Been A Good Investment?

Since shareholders would have lost about 19% over three years, some Teradata Corporation investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Teradata that investors should be aware of in a dynamic business environment.

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.