Andrew Burnes became the CEO of Helloworld Travel Limited (ASX:HLO) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Helloworld Travel.
Comparing Helloworld Travel Limited's CEO Compensation With the industry
Our data indicates that Helloworld Travel Limited has a market capitalization of AU$289m, and total annual CEO compensation was reported as AU$589k for the year to June 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is AU$543.2k, represents most of the total compensation being paid.
On comparing similar companies from the same industry with market caps ranging from AU$141m to AU$565m, we found that the median CEO total compensation was AU$598k. This suggests that Helloworld Travel remunerates its CEO largely in line with the industry average. Moreover, Andrew Burnes also holds AU$20m worth of Helloworld Travel stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Helloworld Travel is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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 Helloworld Travel Limited's Growth Numbers
Over the last three years, Helloworld Travel Limited has shrunk its earnings per share by 45% per year. In the last year, its revenue is down 21%.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-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 Helloworld Travel Limited Been A Good Investment?
Given the total shareholder loss of 53% over three years, many shareholders in Helloworld Travel Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, Helloworld Travel pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for 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 is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Helloworld Travel 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. 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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