Rami Rahim has been the CEO of Juniper Networks, Inc. (NYSE:JNPR) since 2014, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also assess whether Juniper Networks pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Juniper Networks
How Does Total Compensation For Rami Rahim Compare With Other Companies In The Industry?
At the time of writing, our data shows that Juniper Networks, Inc. has a market capitalization of US$7.5b, and reported total annual CEO compensation of US$11m for the year to December 2019. Notably, that’s an increase of 11% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.
On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$11m. From this we gather that Rami Rahim is paid around the median for CEOs in the industry. Furthermore, Rami Rahim directly owns US$17m 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 |
9% |
|
Other |
US$10m |
US$9.0m |
91% |
|
Total Compensation |
US$11m |
US$10.0m |
100% |
Speaking on an industry level, nearly 27% of total compensation represents salary, while the remainder of 73% is other remuneration. It’s interesting to note that Juniper Networks allocates a smaller portion of compensation to salary in comparison to the broader industry. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.
A Look at Juniper Networks, Inc.’s Growth Numbers
Over the last three years, Juniper Networks, Inc. has shrunk its earnings per share by 15% per year. Revenue was pretty flat on last year.
Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has Juniper Networks, Inc. Been A Good Investment?
Given the total shareholder loss of 4.4% over three years, many shareholders in Juniper Networks, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude…
As we touched on above, Juniper Networks, 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. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We’d stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation can have a massive impact on performance, but it’s just one element. That’s why we did some digging and identified 1 warning sign for Juniper Networks that investors should think about before committing capital to this stock.
Switching gears from Juniper Networks, 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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