Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
In 2008 Lew Cirne was appointed CEO of New Relic, Inc. (NYSE:NEWR). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Lew Cirne’s Compensation Compare With Similar Sized Companies?
Our data indicates that New Relic, Inc. is worth US$5.1b, and total annual CEO compensation is US$4.3m. (This is based on the year to March 2019). Notably, that’s an increase of 36% over the year before. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$416k. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.9m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
You can see a visual representation of the CEO compensation at New Relic, below.
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 demonstrates that the company has been improving recently. A good result. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business.
Has New Relic, Inc. Been A Good Investment?
Most shareholders would probably be pleased with New Relic, Inc. for providing a total return of 162% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It looks like New Relic, Inc. pays its CEO less than 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!
It’s not often we see shareholders do so well, and yet the CEO is paid modestly. The cherry on top would be if company insiders are buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at New Relic.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.