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Is Nasdaq, Inc.'s (NASDAQ:NDAQ) CEO Pay Justified?

Simply Wall St

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In 2017 Adena Friedman was appointed CEO of Nasdaq, Inc. (NASDAQ:NDAQ). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. 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. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Nasdaq

How Does Adena Friedman's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Nasdaq, Inc. has a market cap of US$17b, and is paying total annual CEO compensation of US$14m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.0m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

That means Adena Friedman receives fairly typical remuneration for the CEO of a large company. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Nasdaq has changed from year to year.

NasdaqGS:NDAQ CEO Compensation, July 5th 2019

Is Nasdaq, Inc. Growing?

On average over the last three years, Nasdaq, Inc. has grown earnings per share (EPS) by 20% each year (using a line of best fit). In the last year, its revenue changed by just 0.8%.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. You might want to check this free visual report on analyst forecasts for future earnings.

Has Nasdaq, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Nasdaq, Inc. for providing a total return of 66% 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...

Adena Friedman is paid around the same as most CEOs of large companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. So you may want to check if insiders are buying Nasdaq shares with their own money (free access).

If you want to buy a stock that is better than Nasdaq, 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.