A Quick Analysis On NetScout Systems' (NASDAQ:NTCT) CEO Compensation

Anil Singhal became the CEO of NetScout Systems, Inc. (NASDAQ:NTCT) in 1984, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for NetScout Systems

Comparing NetScout Systems, Inc.'s CEO Compensation With the industry

Our data indicates that NetScout Systems, Inc. has a market capitalization of US$2.2b, and total annual CEO compensation was reported as US$2.8m for the year to March 2020. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$519k.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$2.6m. From this we gather that Anil Singhal is paid around the median for CEOs in the industry. Moreover, Anil Singhal also holds US$90m worth of NetScout Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 27% of total compensation represents salary and 73% is other remuneration. It's interesting to note that NetScout Systems allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at NetScout Systems, Inc.'s Growth Numbers

Over the last three years, NetScout Systems, Inc. has shrunk its earnings per share by 40% per year. It saw its revenue drop 5.6% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has NetScout Systems, Inc. Been A Good Investment?

NetScout Systems, Inc. has served shareholders reasonably well, with a total return of 13% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we touched on above, NetScout Systems, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. NetScout Systems has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is close to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for NetScout Systems that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.
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