We Take A Look At Why Nordson Corporation's (NASDAQ:NDSN) CEO Has Earned Their Pay Packet

By
Simply Wall St
Published
February 24, 2022
NasdaqGS:NDSN
Source: Shutterstock

We have been pretty impressed with the performance at Nordson Corporation (NASDAQ:NDSN) recently and CEO Naga Nagarajan deserves a mention for their role in it. Coming up to the next AGM on 01 March 2022, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

View our latest analysis for Nordson

How Does Total Compensation For Naga Nagarajan Compare With Other Companies In The Industry?

Our data indicates that Nordson Corporation has a market capitalization of US$13b, and total annual CEO compensation was reported as US$10m for the year to October 2021. Notably, that's an increase of 93% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$870k.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$11m. From this we gather that Naga Nagarajan is paid around the median for CEOs in the industry. Moreover, Naga Nagarajan also holds US$1.5m worth of Nordson stock directly under their own name.

Component20212020Proportion (2021)
Salary US$870k US$883k 8%
Other US$9.4m US$4.5m 92%
Total CompensationUS$10m US$5.4m100%

Speaking on an industry level, nearly 18% of total compensation represents salary, while the remainder of 82% is other remuneration. Nordson sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NasdaqGS:NDSN CEO Compensation February 24th 2022

A Look at Nordson Corporation's Growth Numbers

Nordson Corporation's earnings per share (EPS) grew 16% per year over the last three years. In the last year, its revenue is up 14%.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Nordson Corporation Been A Good Investment?

We think that the total shareholder return of 68%, over three years, would leave most Nordson Corporation shareholders smiling. 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.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

Whatever your view on compensation, you might want to check if insiders are buying or selling Nordson shares (free trial).

Important note: Nordson is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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