Yahoo Finance Is Nutanix, Inc. (NASDAQ:NTNX) Overpaying Its CEO?
Dheeraj Pandey has been the CEO of Nutanix, Inc. (NASDAQ:NTNX) since 2009. First, this article will compare CEO compensation with compensation at similar sized companies. 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 Nutanix
How Does Dheeraj Pandey's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Nutanix, Inc. has a market cap of US$4.8b, and reported total annual CEO compensation of US$11m for the year to July 2018. While we always look at total compensation first, we note that the salary component is less, at US$350k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.
It would therefore appear that Nutanix, Inc. pays Dheeraj Pandey 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Nutanix has changed over time.
Is Nutanix, Inc. Growing?
On average over the last three years, Nutanix, Inc. has grown earnings per share (EPS) by 16% each year (using a line of best fit). In the last year, its revenue is up 7.0%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has Nutanix, Inc. Been A Good Investment?
With a three year total loss of 30%, Nutanix, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
We examined the amount Nutanix, 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. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Nutanix (free visualization of insider trades).
Important note: Nutanix 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.
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