Yahoo Finance How Should Investors React To Nasdaq's (NASDAQ:NDAQ) CEO Pay?
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Adena Friedman has been the CEO of Nasdaq, Inc. (NASDAQ:NDAQ) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Nasdaq.
See our latest analysis for Nasdaq
Comparing Nasdaq, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Nasdaq, Inc. has a market capitalization of US$20b, and reported total annual CEO compensation of US$14m for the year to December 2019. That's a slight decrease of 3.5% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.
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. From this we gather that Adena Friedman is paid around the median for CEOs in the industry. Furthermore, Adena Friedman directly owns US$40m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$1.0m | US$1.0m | 7% |
Other | US$13m | US$13m | 93% |
Total Compensation | US$14m | US$14m | 100% |
On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Nasdaq sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Nasdaq, Inc.'s Growth
Nasdaq, Inc.'s earnings per share (EPS) grew 72% per year over the last three years. Its revenue is up 9.9% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Nasdaq, Inc. Been A Good Investment?
We think that the total shareholder return of 82%, over three years, would leave most Nasdaq, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
To Conclude...
As we touched on above, Nasdaq, 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. Investors would surely be happy to see that returns have been great, and that earnings per share are up. Indeed, many might consider that Adena is compensated rather modestly, given the solid company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
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 2 warning signs for Nasdaq that you should be aware of before investing.
Switching gears from Nasdaq, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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