Yahoo Finance Is Nationwide Building Society's (LON:NBS) CEO Paid Enough Relative To Peers?
Joe Garner became the CEO of Nationwide Building Society (LON:NBS) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
Check out our latest analysis for Nationwide Building Society
How Does Joe Garner's Compensation Compare With Similar Sized Companies?
According to our data, Nationwide Building Society has a market capitalization of UK£1.7b, and paid its CEO total annual compensation worth UK£2.4m over the year to April 2019. That's a modest increase of 2.4% on the prior year year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£885k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from UK£804m to UK£2.6b, and discovered that the median CEO total compensation of that group was UK£1.4m.
As you can see, Joe Garner is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Nationwide Building Society is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Nationwide Building Society has changed over time.
Is Nationwide Building Society Growing?
On average over the last three years, Nationwide Building Society has shrunk earnings per share by 43% each year (measured with a line of best fit). In the last year, its revenue is down 1.6%.
Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Nationwide Building Society Been A Good Investment?
Nationwide Building Society has served shareholders reasonably well, with a total return of 26% over three years. 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...
We compared the total CEO remuneration paid by Nationwide Building Society, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years. And while shareholder returns have been respectable, they have hardly been superb. So we doubt many shareholders would consider the CEO pay to be particularly modest! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Nationwide Building Society.
Important note: Nationwide Building Society may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.
