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How Should Investors React To nib holdings limited's (ASX:NHF) CEO Pay?

Simply Wall St

Mark Fitzgibbon became the CEO of nib holdings limited (ASX:NHF) in 2007. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for nib holdings

How Does Mark Fitzgibbon's Compensation Compare With Similar Sized Companies?

According to our data, nib holdings limited has a market capitalization of AU$3.1b, and paid its CEO total annual compensation worth AU$3.9m over the year to June 2019. That's actually a decrease on the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.1m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from AU$1.5b to AU$4.7b, and the median CEO total compensation was AU$2.0m.

Thus we can conclude that Mark Fitzgibbon receives more in total compensation than the median of a group of companies in the same market, and of similar size to nib holdings limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at nib holdings, below.

ASX:NHF CEO Compensation, November 17th 2019

Is nib holdings limited Growing?

On average over the last three years, nib holdings limited has grown earnings per share (EPS) by 9.9% each year (using a line of best fit). Its revenue is up 8.5% over last year.

I'd prefer higher revenue growth, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. You might want to check this free visual report on analyst forecasts for future earnings.

Has nib holdings limited Been A Good Investment?

Most shareholders would probably be pleased with nib holdings limited for providing a total return of 57% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We examined the amount nib holdings limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. Shareholders may want to check for free if nib holdings insiders are buying or selling shares.

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

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.

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. Thank you for reading.