Stock Analysis
George Kurian has been the CEO of NetApp, Inc. (NASDAQ:NTAP) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether NetApp pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for NetApp
How Does Total Compensation For George Kurian Compare With Other Companies In The Industry?
According to our data, NetApp, Inc. has a market capitalization of US$10b, and paid its CEO total annual compensation worth US$9.5m over the year to April 2020. That's a notable decrease of 28% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$950k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. So it looks like NetApp compensates George Kurian in line with the median for the industry. What's more, George Kurian holds US$13m 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$950k | US$925k | 10% |
| Other | US$8.5m | US$12m | 90% |
| Total Compensation | US$9.5m | US$13m | 100% |
On an industry level, around 21% of total compensation represents salary and 79% is other remuneration. NetApp sets aside a smaller share of compensation for 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.
A Look at NetApp, Inc.'s Growth Numbers
NetApp, Inc.'s earnings per share (EPS) grew 19% per year over the last three years. In the last year, its revenue is down 7.1%.
Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has NetApp, Inc. Been A Good Investment?
NetApp, Inc. has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As previously discussed, George is compensated close to the median for companies of its size, and which belong to the same industry. But EPS growth for the company has been strong over the last three years, though shareholder returns in comparison haven't been as impressive. So considering these factors, we think the compensation is probably quite reasonable, but investor returns need a boost moving forward.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for NetApp that investors should think about before committing capital to this stock.
Important note: NetApp is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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About NasdaqGS:NTAP
NetApp
Provides a range of enterprise software, systems, and services that customers use to transform their data infrastructures in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific.
Excellent balance sheet established dividend payer.
