Shareholders will probably not be too impressed with the underwhelming results at Tourism Holdings Limited (NZSE:THL) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 21 October 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Comparing Tourism Holdings Limited's CEO Compensation With the industry
At the time of writing, our data shows that Tourism Holdings Limited has a market capitalization of NZ$419m, and reported total annual CEO compensation of NZ$1.2m for the year to June 2021. That's a notable increase of 40% on last year. We note that the salary of NZ$651.1k makes up a sizeable portion of the total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between NZ$144m and NZ$575m had a median total CEO compensation of NZ$506k. This suggests that Grant Webster is paid more than the median for the industry. Furthermore, Grant Webster directly owns NZ$6.2m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 56% of total compensation represents salary and 44% is other remuneration. Although there is a difference in how total compensation is set, Tourism Holdings more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Tourism Holdings Limited's Growth
Tourism Holdings Limited has reduced its earnings per share by 76% a year over the last three years. It saw its revenue drop 10% over the last year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Tourism Holdings Limited Been A Good Investment?
With a total shareholder return of -42% over three years, Tourism Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Tourism Holdings that investors should look into moving forward.
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.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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