Wilmot Hastings has been the CEO of Netflix, Inc. (NASDAQ:NFLX) since 1998. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
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How Does Wilmot Hastings's Compensation Compare With Similar Sized Companies?
Our data indicates that Netflix, Inc. is worth US$151b, and total annual CEO compensation was reported as US$36m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$700k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that Netflix, Inc. pays Wilmot Hastings more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Netflix has changed over time.
Is Netflix, Inc. Growing?
Over the last three years Netflix, Inc. has grown its earnings per share (EPS) by an average of 56% per year (using a line of best fit). It achieved revenue growth of 28% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Netflix, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Netflix, Inc. for providing a total return of 146% 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...
We compared total CEO remuneration at Netflix, Inc. with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if Netflix insiders are buying or selling shares.
Important note: Netflix may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
About NasdaqGS:NFLX
Outstanding track record with excellent balance sheet.
