Does Nufarm's (ASX:NUF) CEO Salary Compare Well With Industry Peers?

Greg Hunt became the CEO of Nufarm Limited (ASX:NUF) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Nufarm pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Nufarm

How Does Total Compensation For Greg Hunt Compare With Other Companies In The Industry?

At the time of writing, our data shows that Nufarm Limited has a market capitalization of AU$1.6b, and reported total annual CEO compensation of AU$1.9m for the year to July 2020. We note that's an increase of 8.1% above last year. In particular, the salary of AU$1.29m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from AU$547m to AU$2.2b, the reported median CEO total compensation was AU$882k. Hence, we can conclude that Greg Hunt is remunerated higher than the industry median. Furthermore, Greg Hunt directly owns AU$2.3m worth of shares in the company.

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Our data reveals that Nufarm allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Nufarm Limited's Growth Numbers

Over the last three years, Nufarm Limited has shrunk its earnings per share by 118% per year. In the last year, its revenue is up 6.1%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Nufarm Limited Been A Good Investment?

Since shareholders would have lost about 50% over three years, some Nufarm Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Nufarm pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

So you may want to check if insiders are buying Nufarm shares with their own money (free access).

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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. 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.
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