Andrew Thorburn became the CEO of National Australia Bank Limited (ASX:NAB) in 2014. This analysis aims first to contrast CEO compensation with other large companies. Then we’ll look at a snap shot of the business growth. 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.
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How Does Andrew Thorburn’s Compensation Compare With Similar Sized Companies?
According to our data, National Australia Bank Limited has a market capitalization of AU$69b, and pays its CEO total annual compensation worth AU$6.4m. (This number is for the twelve months until 2018). That’s less than last year. While we always look at total compensation first, we note that the salary component is less, at AU$2.2m. We looked at a group of companies with market capitalizations over AU$11b and the median CEO compensation was AU$5.8m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
That means Andrew Thorburn receives fairly typical remuneration for the CEO of a large company. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at National Australia Bank has changed from year to year.
Is National Australia Bank Limited Growing?
National Australia Bank Limited has reduced its earnings per share by an average of 7.2% a year, over the last three years. It achieved revenue growth of 6.5% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has National Australia Bank Limited Been A Good Investment?
National Australia Bank Limited has generated a total shareholder return of 22% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
Andrew Thorburn is paid around the same as most CEOs of large companies.
We feel that earnings per share have been a bit disappointing, but and we don’t think the total returns are amazing. We wouldn’t say the CEO pay is too high, but it’s probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. Whatever your view on compensation, you might want to check if insiders are buying or selling National Australia Bank shares (free trial).
Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.