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Here's Why Shareholders May Want To Be Cautious With Increasing National Australia Bank Limited's (ASX:NAB) CEO Pay Packet

Key Insights

  • National Australia Bank's Annual General Meeting to take place on 14th of December

  • Salary of AU$2.38m is part of CEO Ross McEwan's total remuneration

  • The total compensation is 129% higher than the average for the industry

  • National Australia Bank's total shareholder return over the past three years was 45% while its EPS grew by 29% over the past three years

CEO Ross McEwan has done a decent job of delivering relatively good performance at National Australia Bank Limited (ASX:NAB) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 14th of December. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for National Australia Bank

How Does Total Compensation For Ross McEwan Compare With Other Companies In The Industry?

According to our data, National Australia Bank Limited has a market capitalization of AU$91b, and paid its CEO total annual compensation worth AU$6.2m over the year to September 2023. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$2.4m.

For comparison, other companies in the Australian Banks industry with market capitalizations above AU$12b, reported a median total CEO compensation of AU$2.7m. Accordingly, our analysis reveals that National Australia Bank Limited pays Ross McEwan north of the industry median. Moreover, Ross McEwan also holds AU$2.7m worth of National Australia Bank stock directly under their own name.

Component

2023

2022

Proportion (2023)

Salary

AU$2.4m

AU$2.5m

39%

Other

AU$3.8m

AU$3.8m

61%

Total Compensation

AU$6.2m

AU$6.3m

100%

Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. It's interesting to note that National Australia Bank allocates a smaller portion of compensation to salary in comparison 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.

ceo-compensation
ceo-compensation

National Australia Bank Limited's Growth

National Australia Bank Limited's earnings per share (EPS) grew 29% per year over the last three years. In the last year, its revenue is up 7.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has National Australia Bank Limited Been A Good Investment?

Boasting a total shareholder return of 45% over three years, National Australia Bank Limited has done well by shareholders. 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...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for National Australia Bank that investors should look into moving forward.

Switching gears from National Australia Bank, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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