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Lew Cirne became the CEO of New Relic, Inc. (NYSE:NEWR) in 2008. First, this article will compare CEO compensation with compensation at similar sized 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.
How Does Lew Cirne's Compensation Compare With Similar Sized Companies?
Our data indicates that New Relic, Inc. is worth US$5.3b, and total annual CEO compensation is US$3.2m. (This number is for the twelve months until March 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$315k. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.9m.
A first glance this seems like a real positive for shareholders, since Lew Cirne is paid less than the average total compensation paid by similar sized companies. 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 New Relic has changed over time.
Is New Relic, Inc. Growing?
On average over the last three years, New Relic, Inc. has grown earnings per share (EPS) by 32% each year (using a line of best fit). Its revenue is up 35% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has New Relic, Inc. Been A Good Investment?
Most shareholders would probably be pleased with New Relic, Inc. for providing a total return of 200% 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.
It appears that New Relic, Inc. remunerates its CEO below most similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Lew Cirne deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling New Relic (free visualization of insider trades).
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 firstname.lastname@example.org. 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.