Rami Rahim became the CEO of Juniper Networks, Inc. (NYSE:JNPR) in 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Rami Rahim’s Compensation Compare With Similar Sized Companies?
According to our data, Juniper Networks, Inc. has a market capitalization of US$9.2b, and pays its CEO total annual compensation worth US$10.0m. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.0m. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.8m.
Thus we can conclude that Rami Rahim receives more in total compensation than the median of a group of companies in the same market, and of similar size to Juniper Networks, Inc.. However, this doesn’t necessarily mean the pay is too high. 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 Juniper Networks has changed from year to year.
Is Juniper Networks, Inc. Growing?
On average over the last three years, Juniper Networks, Inc. has shrunk earnings per share by 12% each year (measured with a line of best fit). In the last year, its revenue is down -6.7%.
Few shareholders would be pleased to read that earnings per share are lower over three years. 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.
Has Juniper Networks, Inc. Been A Good Investment?
With a total shareholder return of 25% over three years, Juniper Networks, Inc. shareholders would, in general, be reasonably content. 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.
We compared the total CEO remuneration paid by Juniper Networks, Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.Earnings per share have not grown in three years, and the revenue growth fails to impress us.
And shareholder returns are decent but not great. So you may want to delve deeper, because we don’t think the CEO pay is too low. Whatever your view on compensation, you might want to check if insiders are buying or selling Juniper Networks shares (free trial).
If you want to buy a stock that is better than Juniper Networks, this free list of high return, low debt companies is a great place to look.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.