- Oops!Something went wrong.Please try again later.
Greg Hunt has been the CEO of Nufarm Limited (ASX:NUF) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Nufarm Limited's CEO Compensation With the industry
At the time of writing, our data shows that Nufarm Limited has a market capitalization of AU$1.6b, and reported total annual CEO compensation of AU$1.9m for the year to July 2020. We note that's an increase of 8.1% above last year. We note that the salary portion, which stands at AU$1.29m constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between AU$1.3b and AU$4.2b had a median total CEO compensation of AU$1.8m. This suggests that Nufarm remunerates its CEO largely in line with the industry average. Furthermore, Greg Hunt directly owns AU$2.1m worth of shares in the company.
Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. Although there is a difference in how total compensation is set, Nufarm more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Nufarm Limited's Growth
Over the last three years, Nufarm Limited has shrunk its earnings per share by 119% per year. Its revenue is down 52% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Nufarm Limited Been A Good Investment?
With a three year total loss of 52% for the shareholders, Nufarm Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Greg is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Nufarm that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.