This Is Why nib holdings limited's (ASX:NHF) CEO Compensation Looks Appropriate

Simply Wall St
October 28, 2021
Source: Shutterstock

CEO Mark Fitzgibbon has done a decent job of delivering relatively good performance at nib holdings limited (ASX:NHF) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 04 November 2021. Here is our take on why we think the CEO compensation looks appropriate.

Check out our latest analysis for nib holdings

Comparing nib holdings limited's CEO Compensation With the industry

Our data indicates that nib holdings limited has a market capitalization of AU$3.1b, and total annual CEO compensation was reported as AU$3.1m for the year to June 2021. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.1m.

In comparison with other companies in the industry with market capitalizations ranging from AU$1.3b to AU$4.2b, the reported median CEO total compensation was AU$2.6m. From this we gather that Mark Fitzgibbon is paid around the median for CEOs in the industry. Moreover, Mark Fitzgibbon also holds AU$18m worth of nib holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary AU$1.1m AU$1.1m 36%
Other AU$2.0m AU$2.0m 64%
Total CompensationAU$3.1m AU$3.1m100%

Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. In nib holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ASX:NHF CEO Compensation October 28th 2021

A Look at nib holdings limited's Growth Numbers

Over the past three years, nib holdings limited has seen its earnings per share (EPS) grow by 6.2% per year. It achieved revenue growth of 4.6% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has nib holdings limited Been A Good Investment?

We think that the total shareholder return of 35%, over three years, would leave most nib holdings limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for nib holdings that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.