Harry Herington has been the CEO of NIC Inc. (NASDAQ:EGOV) since 2008. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Harry Herington's Compensation Compare With Similar Sized Companies?
According to our data, NIC Inc. has a market capitalization of US$1.4b, and paid its CEO total annual compensation worth US$2.3m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$500k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.8m.
Most shareholders would consider it a positive that Harry Herington takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at NIC, below.
Is NIC Inc. Growing?
NIC Inc. has reduced its earnings per share by an average of 3.1% a year, over the last three years (measured with a line of best fit). Its revenue is up 2.7% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has NIC Inc. Been A Good Investment?
Since shareholders would have lost about 0.7% over three years, some NIC Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
It looks like NIC Inc. pays its CEO less than similar sized companies.
The compensation paid to Harry Herington is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Whatever your view on compensation, you might want to check if insiders are buying or selling NIC shares (free trial).
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.
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