Is NiSource Inc.'s (NYSE:NI) CEO Pay Fair?
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Joe Hamrock became the CEO of NiSource Inc. (NYSE:NI) in 2015. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for NiSource
How Does Joe Hamrock's Compensation Compare With Similar Sized Companies?
According to our data, NiSource Inc. has a market capitalization of US$11b, and pays its CEO total annual compensation worth US$5.8m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$990k. 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. (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).
Most shareholders would consider it a positive that Joe Hamrock takes less in total compensation than the CEOs of most other large companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.
You can see, below, how CEO compensation at NiSource has changed over time.
Is NiSource Inc. Growing?
Over the last three years NiSource Inc. has shrunk its earnings per share by an average of 60% per year (measured with a line of best fit). It achieved revenue growth of 4.1% over the last year.
Sadly for shareholders, earnings per share are actually down, over 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has NiSource Inc. Been A Good Investment?
With a total shareholder return of 24% over three years, NiSource Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
It looks like NiSource Inc. pays its CEO less than the average at large companies.
The compensation paid to Joe Hamrock is lower than is usual at larger companies. But the company lacks earnings per share growth, and returns to shareholders are less than stellar. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. Shareholders may want to check for free if NiSource insiders are buying or selling shares.
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.
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.
