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

Key Insights

• Nordson's Annual General Meeting to take place on 28th of February
• CEO Naga Nagarajan's total compensation includes salary of US$900.0k
• The overall pay is comparable to the industry average
• Over the past three years, Nordson's EPS grew by 14% and over the past three years, the total shareholder return was 40%

The performance at Nordson Corporation (NASDAQ:NDSN) has been quite strong recently and CEO Naga Nagarajan has played a role in it. Coming up to the next AGM on 28th of February, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders 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?

At the time of writing, our data shows that Nordson Corporation has a market capitalization of US$12b, and reported total annual CEO compensation of US$8.4m for the year to October 2022. We note that's a decrease of 18% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$900k.

On comparing similar companies in the American Machinery industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$10m. This suggests that Nordson remunerates its CEO largely in line with the industry average. What's more, Naga Nagarajan holds US$7.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	US$900k	US$870k	11%
Other	US$7.5m	US$9.4m	89%
Total Compensation	US$8.4m	US$10m	100%

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. It's interesting to note that Nordson allocates a smaller portion of compensation to salary 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.

A Look at Nordson Corporation's Growth Numbers

Nordson Corporation has seen its earnings per share (EPS) increase by 14% a year over the past three years. It achieved revenue growth of 6.0% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Nordson Corporation Been A Good Investment?

Boasting a total shareholder return of 40% over three years, Nordson Corporation has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in 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.

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. That's why we did some digging and identified 1 warning sign for Nordson that you should be aware of before investing.

Switching gears from Nordson, 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.