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Is NIKE, Inc. (NYSE:NKE) Excessively Paying Its CEO?

Simply Wall St

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Mark Parker has been the CEO of NIKE, Inc. (NYSE:NKE) since 2006. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for NIKE

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

Our data indicates that NIKE, Inc. is worth US$132b, and total annual CEO compensation is US$9.5m. (This number is for the twelve months until May 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.6m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).

So Mark Parker receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at NIKE has changed over time.

NYSE:NKE CEO Compensation, May 12th 2019

Is NIKE, Inc. Growing?

NIKE, Inc. has reduced its earnings per share by an average of 13% a year, over the last three years (measured with a line of best fit). Its revenue is up 9.7% 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?

Boasting a total shareholder return of 52% over three years, NIKE, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Mark Parker is paid around what is normal the leaders of larger companies.

We feel that earnings per share have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. So we think most shareholders wouldn't be too worried about CEO compensation, which is close to the median for large companies. Shareholders may want to check for free if NIKE insiders are buying or selling shares.

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