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Is Nelnet, Inc.'s (NYSE:NNI) CEO Pay Fair?

In 2014 Jeff Noordhoek was appointed CEO of Nelnet, Inc. (NYSE:NNI). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Nelnet

How Does Jeff Noordhoek's Compensation Compare With Similar Sized Companies?

Our data indicates that Nelnet, Inc. is worth US$2.4b, and total annual CEO compensation is US$1.8m. (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$716k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.0m.

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Most shareholders would consider it a positive that Jeff Noordhoek takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at Nelnet, below.

NYSE:NNI CEO Compensation, July 24th 2019
NYSE:NNI CEO Compensation, July 24th 2019

Is Nelnet, Inc. Growing?

On average over the last three years, Nelnet, Inc. has shrunk earnings per share by 2.4% each year (measured with a line of best fit). In the last year, its revenue is up 14%.

Unfortunately there is a complete lack of earnings per share improvement, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Nelnet, Inc. Been A Good Investment?

I think that the total shareholder return of 57%, over three years, would leave most Nelnet, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

It appears that Nelnet, Inc. remunerates its CEO below most similar sized companies.

It's well worth noting that while Jeff Noordhoek is paid less than most company leaders (at similar sized companies), there isn't much EPS growth. Having said that, returns to shareholders have been great. So, while it would be nice to have EPS growth, on our analysis the CEO compensation is not an issue. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Nelnet (free visualization of insider trades).

Important note: Nelnet may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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 editorial-team@simplywallst.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.