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Wilmot Hastings has been the CEO of Netflix, Inc. (NASDAQ:NFLX) since 1998. This analysis aims first to contrast CEO compensation with other large companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Wilmot Hastings’s Compensation Compare With Similar Sized Companies?
According to our data, Netflix, Inc. has a market capitalization of US$164b, and pays its CEO total annual compensation worth US$36m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$700k. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Wilmot Hastings is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Netflix, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Netflix has changed from year to year.
Is Netflix, Inc. Growing?
Over the last three years Netflix, Inc. has grown its earnings per share (EPS) by an average of 73% per year (using a line of best fit). It achieved revenue growth of 30% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see.
Has Netflix, Inc. Been A Good Investment?
Boasting a total shareholder return of 288% over three years, Netflix, Inc. 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.
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.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Netflix (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.