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This article will reflect on the compensation paid to Craig Scroggie who has served as CEO of NEXTDC Limited (ASX:NXT) since 2012. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns 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$5.1b, and reported total annual CEO compensation of AU$3.1m for the year to June 2020. Notably, that's an increase of 44% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.3m.
In comparison with other companies in the industry with market capitalizations ranging from AU$2.7b to AU$8.8b, the reported median CEO total compensation was AU$4.4m. This suggests that NEXTDC remunerates its CEO largely in line with the industry average. Moreover, Craig Scroggie also holds AU$22m worth of NEXTDC stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. NEXTDC 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.
NEXTDC Limited's Growth
Over the last three years, NEXTDC Limited has shrunk its earnings per share by 127% per year. Its revenue is up 18% over the last year.
Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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?
Most shareholders would probably be pleased with NEXTDC Limited for providing a total return of 142% over three years. 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.
As we touched on above, NEXTDC Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company has logged solid shareholder returns for the past three years. Revenues have also showed some positive momentum, recently. However, on a concerning note, EPS is not growing. However, considering overall positive performance, we think Craig, shareholders might not be too worried about the CEO's compensation.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for NEXTDC that investors should look into moving forward.
Important note: NEXTDC is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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