We Think Shareholders May Consider Being More Generous With NEXTDC Limited's (ASX:NXT) CEO Compensation Package

Simply Wall St

November 10, 2022 at 10:32 PM·3 min read

The decent performance at NEXTDC Limited (ASX:NXT) recently will please most shareholders as they go into the AGM coming up on 18 November 2022. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

Check out our latest analysis for NEXTDC

Comparing NEXTDC Limited's CEO Compensation With The Industry

At the time of writing, our data shows that NEXTDC Limited has a market capitalization of AU$4.0b, and reported total annual CEO compensation of AU$3.6m for the year to June 2022. That's a notable increase of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.3m.

On comparing similar companies from the same industry with market caps ranging from AU$3.1b to AU$9.9b, we found that the median CEO total compensation was AU$6.0m. Accordingly, NEXTDC pays its CEO under the industry median. Moreover, Craig Scroggie also holds AU$3.4m worth of NEXTDC stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	AU$1.3m	AU$1.3m	36%
Other	AU$2.3m	AU$1.8m	64%
Total Compensation	AU$3.6m	AU$3.1m	100%

Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. NEXTDC pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NEXTDC Limited's Growth

Over the past three years, NEXTDC Limited has seen its earnings per share (EPS) grow by 40% per year. In the last year, its revenue is up 18%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has NEXTDC Limited Been A Good Investment?

NEXTDC Limited has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

The company's overall performance, while not bad, could be better. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for NEXTDC that investors should think about before committing capital to this stock.

Important note: NEXTDC is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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Comparing NEXTDC Limited's CEO Compensation With The Industry

NEXTDC Limited's Growth

Has NEXTDC Limited Been A Good Investment?

To Conclude...

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