Increases to National Australia Bank Limited's (ASX:NAB) CEO Compensation Might Cool off for now

Key Insights

• National Australia Bank will host its Annual General Meeting on 14th of December
• Total pay for CEO Ross McEwan includes AU$2.38m salary
• Total compensation is 129% above industry average
• Over the past three years, National Australia Bank's EPS grew by 29% and over the past three years, the total shareholder return was 45%

CEO Ross McEwan has done a decent job of delivering relatively good performance at National Australia Bank Limited (ASX:NAB) recently. As shareholders go into the upcoming AGM on 14th of December, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for National Australia Bank

Comparing National Australia Bank Limited's CEO Compensation With The Industry

According to our data, National Australia Bank Limited has a market capitalization of AU$91b, and paid its CEO total annual compensation worth AU$6.2m over the year to September 2023. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$2.4m.

For comparison, other companies in the Australian Banks industry with market capitalizations above AU$12b, reported a median total CEO compensation of AU$2.7m. Accordingly, our analysis reveals that National Australia Bank Limited pays Ross McEwan north of the industry median. What's more, Ross McEwan holds AU$2.7m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$2.4m	AU$2.5m	39%
Other	AU$3.8m	AU$3.8m	61%
Total Compensation	AU$6.2m	AU$6.3m	100%

On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. It's interesting to note that National Australia Bank allocates a smaller portion of compensation to salary in comparison 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.

A Look at National Australia Bank Limited's Growth Numbers

National Australia Bank Limited's earnings per share (EPS) grew 29% per year over the last three years. It achieved revenue growth of 7.5% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has National Australia Bank Limited Been A Good Investment?

Most shareholders would probably be pleased with National Australia Bank Limited for providing a total return of 45% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for National Australia Bank that investors should think about before committing capital to this stock.

Switching gears from National Australia Bank, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.