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Shareholders May Find It Hard To Justify Increasing Hargreaves Lansdown plc's (LON:HL.) CEO Compensation For Now

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In the past three years, the share price of Hargreaves Lansdown plc (LON:HL.) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 15 October 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Hargreaves Lansdown

How Does Total Compensation For Chris Hill Compare With Other Companies In The Industry?

According to our data, Hargreaves Lansdown plc has a market capitalization of UK£6.6b, and paid its CEO total annual compensation worth UK£2.7m over the year to June 2021. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£648k.

On comparing similar companies from the same industry with market caps ranging from UK£2.9b to UK£8.8b, we found that the median CEO total compensation was UK£2.7m. This suggests that Hargreaves Lansdown remunerates its CEO largely in line with the industry average. What's more, Chris Hill holds UK£951k worth of shares in the company in their own name.

Component

2021

2020

Proportion (2021)

Salary

UK£648k

UK£630k

24%

Other

UK£2.0m

UK£2.1m

76%

Total Compensation

UK£2.7m

UK£2.7m

100%

Speaking on an industry level, nearly 45% of total compensation represents salary, while the remainder of 55% is other remuneration. Hargreaves Lansdown sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

Hargreaves Lansdown plc's Growth

Over the past three years, Hargreaves Lansdown plc has seen its earnings per share (EPS) grow by 7.9% per year. Its revenue is up 15% over the last year.

This revenue growth could really point to a brighter future. And, while modest, the EPS growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Hargreaves Lansdown plc Been A Good Investment?

With a three year total loss of 15% for the shareholders, Hargreaves Lansdown plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Hargreaves Lansdown (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Hargreaves Lansdown 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.

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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