In 2016 David Anderson was appointed CEO of Northwest Natural Holding Company (NYSE:NWN). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
How Does David Anderson's Compensation Compare With Similar Sized Companies?
Our data indicates that Northwest Natural Holding Company is worth US$1.9b, and total annual CEO compensation is US$3.2m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$642k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$3.6m.
So David Anderson is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Northwest Natural Holding has changed from year to year.
Is Northwest Natural Holding Company Growing?
Over the last three years Northwest Natural Holding Company has shrunk its earnings per share by an average of 48% per year (measured with a line of best fit). It saw its revenue drop -6.5% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Northwest Natural Holding Company Been A Good Investment?
Most shareholders would probably be pleased with Northwest Natural Holding Company for providing a total return of 41% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
David Anderson is paid around the same as most CEOs of similar size companies.
The company isn't growing earnings per share, but shareholder returns have been strong over the last three years. So we doubt many are complaining about the fairly normal CEO pay. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Northwest Natural Holding (free visualization of insider trades).
Important note: Northwest Natural Holding may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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. Thank you for reading.