Increases to CEO Compensation Might Be Put On Hold For Now at NEXTDC Limited (ASX:NXT)
Key Insights
NEXTDC will host its Annual General Meeting on 24th of November
CEO Craig Scroggie's total compensation includes salary of AU$1.30m
The overall pay is 56% above the industry average
NEXTDC's EPS grew by 78% over the past three years while total shareholder return over the past three years was 7.8%
Under the guidance of CEO Craig Scroggie, NEXTDC Limited (ASX:NXT) has performed reasonably well recently. As shareholders go into the upcoming AGM on 24th of November, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.
See our latest analysis for NEXTDC
How Does Total Compensation For Craig Scroggie Compare With Other Companies In The Industry?
At the time of writing, our data shows that NEXTDC Limited has a market capitalization of AU$6.7b, and reported total annual CEO compensation of AU$3.2m for the year to June 2023. That's a notable decrease of 10% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.3m.
For comparison, other companies in the Australian IT industry with market capitalizations ranging between AU$3.1b and AU$9.8b had a median total CEO compensation of AU$2.0m. Hence, we can conclude that Craig Scroggie is remunerated higher than the industry median. Furthermore, Craig Scroggie directly owns AU$5.8m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$1.3m | AU$1.3m | 41% |
Other | AU$1.9m | AU$2.3m | 59% |
Total Compensation | AU$3.2m | AU$3.6m | 100% |
On an industry level, total compensation is equally proportioned between salary and other compensation, that is, they each represent approximately 50% of the total compensation. In NEXTDC's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
NEXTDC Limited's Growth
NEXTDC Limited has seen its earnings per share (EPS) increase by 78% a year over the past three years. Its revenue is up 25% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 NEXTDC Limited Been A Good Investment?
NEXTDC Limited has not done too badly by shareholders, with a total return of 7.8%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.
To Conclude...
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for NEXTDC you should be aware of, and 1 of them can't be ignored.
Switching gears from NEXTDC, 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.
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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.
