Here's Why Nelnet, Inc.'s (NYSE:NNI) CEO Might See A Pay Rise Soon

Shareholders will probably not be disappointed by the robust results at Nelnet, Inc. (NYSE:NNI) recently and they will be keeping this in mind as they go into the AGM on 20 May 2021. 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 Nelnet

How Does Total Compensation For Jeff Noordhoek Compare With Other Companies In The Industry?

At the time of writing, our data shows that Nelnet, Inc. has a market capitalization of US$2.9b, and reported total annual CEO compensation of US$1.6m for the year to December 2020. That's slightly lower by 6.2% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$760k.

On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$10m. Accordingly, Nelnet pays its CEO under the industry median. What's more, Jeff Noordhoek holds US$40m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$760k	US$738k	48%
Other	US$809k	US$935k	52%
Total Compensation	US$1.6m	US$1.7m	100%

On an industry level, roughly 18% of total compensation represents salary and 82% is other remuneration. It's interesting to note that Nelnet pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Nelnet, Inc.'s Growth

Nelnet, Inc. has seen its earnings per share (EPS) increase by 33% a year over the past three years. Its revenue is up 28% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Nelnet, Inc. Been A Good Investment?

Nelnet, Inc. has served shareholders reasonably well, with a total return of 24% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

The company's overall performance, while not bad, could be better. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which are a bit unpleasant) in Nelnet we think you should know about.

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.

If you decide to trade Nelnet, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.