Yahoo Finance This Is Why Good Spirits Hospitality Limited's (NZSE:GSH) CEO Compensation Looks Appropriate
The share price of Good Spirits Hospitality Limited (NZSE:GSH) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 19 December 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
See our latest analysis for Good Spirits Hospitality
Comparing Good Spirits Hospitality Limited's CEO Compensation With the industry
According to our data, Good Spirits Hospitality Limited has a market capitalization of NZ$4.6m, and paid its CEO total annual compensation worth NZ$350k over the year to June 2021. We note that's a small decrease of 7.9% on last year. Notably, the salary of NZ$350k is the entirety of the CEO compensation.
In comparison with other companies in the industry with market capitalizations under NZ$295m, the reported median total CEO compensation was NZ$440k. This suggests that Good Spirits Hospitality remunerates its CEO largely in line with the industry average. Moreover, Geoff Tuttle also holds NZ$94k worth of Good Spirits Hospitality stock directly under their own name.
Component | 2021 | 2020 | Proportion (2021) |
Salary | NZ$350k | NZ$350k | 100% |
Other | - | NZ$30k | - |
Total Compensation | NZ$350k | NZ$380k | 100% |
On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. Speaking on a company level, Good Spirits Hospitality prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Good Spirits Hospitality Limited's Growth Numbers
Over the last three years, Good Spirits Hospitality Limited has shrunk its earnings per share by 95% per year. In the last year, its revenue changed by just 0.7%.
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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Good Spirits Hospitality Limited Been A Good Investment?
With a total shareholder return of 13% over three years, Good Spirits Hospitality Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
Good Spirits Hospitality pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Good Spirits Hospitality that investors should be aware of in a dynamic business environment.
Important note: Good Spirits Hospitality is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
