Is NIKE Inc’s (NYSE:NKE) CEO Salary Justified?
In 2006 Mark Parker was appointed CEO of NIKE Inc (NYSE:NKE). First, this article will compare CEO compensation with compensation at other large companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for NIKE
How Does Mark Parker’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that NIKE Inc has a market cap of US$114b, and is paying total annual CEO compensation of US$9.5m. (This is based on the year to 2018). That’s actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$1.6m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m.
So Mark Parker is paid around the average of the companies we looked at. 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 NIKE has changed from year to year.
Is NIKE Inc Growing?
NIKE Inc has reduced its earnings per share by an average of 14% a year, over the last three years. Its revenue is up 8.5% over last year.
Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
You might want to check this free visual report on analyst forecasts for future earnings.
Has NIKE Inc Been A Good Investment?
NIKE Inc has served shareholders reasonably well, with a total return of 12% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
In Summary…
Mark Parker is paid around the same as most CEOs of large companies.
The company isn’t growing earnings per share, and nor have the total returns inspired us. We do not think the CEO pay is a problem, but we’d venture the company should look to improve its business metrics (and share price) before paying any more. Whatever your view on compensation, you might want to check if insiders are buying or selling NIKE shares (free trial).
Or you might prefer this data-rich interactive visualization of historic revenue and earnings.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
