Yahoo Finance Is NOW Inc.’s (NYSE:DNOW) CEO Pay Justified?
Robert Workman has been the CEO of NOW Inc. (NYSE:DNOW) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for NOW
How Does Robert Workman’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that NOW Inc. has a market cap of US$1.3b, and is paying total annual CEO compensation of US$4.9m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$600k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$3.7m.
It would therefore appear that NOW Inc. pays Robert Workman more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at NOW has changed from year to year.
Is NOW Inc. Growing?
On average over the last three years, NOW Inc. has grown earnings per share (EPS) by 78% each year. In the last year, its revenue is up 20%.
This demonstrates that the company has been improving recently. A good result. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.
You might want to check this free visual report on analyst forecasts for future earnings.
Has NOW Inc. Been A Good Investment?
With a three year total loss of 17%, NOW Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary…
We examined the amount NOW Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Whatever your view on compensation, you might want to check if insiders are buying or selling NOW shares (free trial).
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
