Here's Why Nelnet, Inc.'s (NYSE:NNI) CEO Compensation Is The Least Of Shareholders Concerns

Key Insights

• Nelnet's Annual General Meeting to take place on 16th of May
• Salary of US$854.5k is part of CEO Jeff Noordhoek's total remuneration
• Total compensation is 73% below industry average
• Nelnet's total shareholder return over the past three years was 37% while its EPS was down 35% over the past three years

Performance at Nelnet, Inc. (NYSE:NNI) has been rather uninspiring recently and shareholders may be wondering how CEO Jeff Noordhoek plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 16th of May. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

Check out our latest analysis for Nelnet

Comparing Nelnet, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Nelnet, Inc. has a market capitalization of US$3.6b, and reported total annual CEO compensation of US$1.9m for the year to December 2023. We note that's a decrease of 15% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$855k.

In comparison with other companies in the American Consumer Finance industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$7.1m. In other words, Nelnet pays its CEO lower than the industry median. What's more, Jeff Noordhoek holds US$54m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$855k	US$814k	45%
Other	US$1.0m	US$1.4m	55%
Total Compensation	US$1.9m	US$2.2m	100%

Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. Nelnet is paying a higher share of its remuneration through a 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.

Nelnet, Inc.'s Growth

Over the last three years, Nelnet, Inc. has shrunk its earnings per share by 35% per year. It saw its revenue drop 22% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Nelnet, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Nelnet, Inc. for providing a total return of 37% over three years. 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...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Nelnet (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Nelnet, 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.