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Does NorthWestern Corporation's (NYSE:NWE) CEO Pay Reflect Performance?

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Simply Wall St
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In 2008 Bob Rowe was appointed CEO of NorthWestern Corporation (NYSE:NWE). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for NorthWestern

How Does Bob Rowe's Compensation Compare With Similar Sized Companies?

According to our data, NorthWestern Corporation has a market capitalization of US$3.6b, and paid its CEO total annual compensation worth US$3.2m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$625k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.

A first glance this seems like a real positive for shareholders, since Bob Rowe is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at NorthWestern has changed over time.

NYSE:NWE CEO Compensation, January 6th 2020
NYSE:NWE CEO Compensation, January 6th 2020

Is NorthWestern Corporation Growing?

NorthWestern Corporation has increased its earnings per share (EPS) by an average of 7.8% a year, over the last three years (using a line of best fit). In the last year, its revenue changed by just 0.9%.

I would argue that the improvement in revenue isn't particularly impressive, but I'm happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.

Has NorthWestern Corporation Been A Good Investment?

I think that the total shareholder return of 36%, over three years, would leave most NorthWestern Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

NorthWestern Corporation is currently paying its CEO below what is normal for companies of its size.

Bob Rowe is paid less than what is normal at similar size companies, and the total shareholder return has been pleasing over the last three years. Although we could see higher growth, we'd argue the remuneration is modest, based on these observations. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling NorthWestern (free visualization of insider trades).

If you want to buy a stock that is better than NorthWestern, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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. Thank you for reading.