This Is Why We Think NEXTDC Limited's (ASX:NXT) CEO Might Get A Pay Rise Approved By Shareholders

The decent performance at NEXTDC Limited (ASX:NXT) recently will please most shareholders as they go into the AGM coming up on 18 November 2022. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

See our latest analysis for NEXTDC

How Does Total Compensation For Craig Scroggie Compare With Other Companies In The Industry?

At the time of writing, our data shows that NEXTDC Limited has a market capitalization of AU$4.0b, and reported total annual CEO compensation of AU$3.6m for the year to June 2022. Notably, that's an increase of 14% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.3m.

On comparing similar companies from the same industry with market caps ranging from AU$3.1b to AU$9.9b, we found that the median CEO total compensation was AU$6.0m. This suggests that Craig Scroggie is paid below the industry median. Moreover, Craig Scroggie also holds AU$3.4m worth of NEXTDC stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	AU$1.3m	AU$1.3m	36%
Other	AU$2.3m	AU$1.8m	64%
Total Compensation	AU$3.6m	AU$3.1m	100%

Speaking on an industry level, salary and non-salary portions, both make up 50% each of the total remuneration. It's interesting to note that NEXTDC allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NEXTDC Limited's Growth

NEXTDC Limited has seen its earnings per share (EPS) increase by 40% a year over the past three years. Its revenue is up 18% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 NEXTDC Limited Been A Good Investment?

With a total shareholder return of 26% over three years, NEXTDC Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for NEXTDC that investors should look into moving forward.

Switching gears from NEXTDC, 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.