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George Kurian became the CEO of NetApp, Inc. (NASDAQ:NTAP) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for NetApp.
How Does Total Compensation For George Kurian Compare With Other Companies In The Industry?
According to our data, NetApp, Inc. has a market capitalization of US$14b, and paid its CEO total annual compensation worth US$9.5m over the year to April 2020. Notably, that's a decrease of 28% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$950k.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$12m. This suggests that NetApp remunerates its CEO largely in line with the industry average. Moreover, George Kurian also holds US$19m worth of NetApp stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. NetApp pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
NetApp, Inc.'s Growth
Over the past three years, NetApp, Inc. has seen its earnings per share (EPS) grow by 9.3% per year. It saw its revenue drop 4.0% over the last year.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has NetApp, Inc. Been A Good Investment?
NetApp, Inc. has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As previously discussed, George is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS and shareholder returns have been stable over the last three years, but have not grown substantially. Considering the steady performance, it's tough to call out CEO compensation as too high, but shareholders might want to see more robust growth metrics before agreeing to a future raise.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for NetApp that investors should be aware of in a dynamic business environment.
Switching gears from NetApp, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. 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.
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