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This Is Why Aurizon Holdings Limited's (ASX:AZJ) CEO Compensation Looks Appropriate

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Under the guidance of CEO Tony Harding, Aurizon Holdings Limited (ASX:AZJ) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 12 October 2021. We present our case of why we think CEO compensation looks fair.

Check out our latest analysis for Aurizon Holdings

How Does Total Compensation For Tony Harding Compare With Other Companies In The Industry?

Our data indicates that Aurizon Holdings Limited has a market capitalization of AU$7.2b, and total annual CEO compensation was reported as AU$4.9m for the year to June 2021. That's a notable increase of 14% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.7m.

For comparison, other companies in the same industry with market capitalizations ranging between AU$5.5b and AU$16b had a median total CEO compensation of AU$6.0m. This suggests that Aurizon Holdings remunerates its CEO largely in line with the industry average. Moreover, Tony Harding also holds AU$156k worth of Aurizon Holdings stock directly under their own name.

Component

2021

2020

Proportion (2021)

Salary

AU$1.7m

AU$1.7m

34%

Other

AU$3.2m

AU$2.6m

66%

Total Compensation

AU$4.9m

AU$4.3m

100%

Speaking on an industry level, nearly 54% of total compensation represents salary, while the remainder of 46% is other remuneration. Aurizon Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Aurizon Holdings Limited's Growth

Aurizon Holdings Limited has seen its earnings per share (EPS) increase by 5.8% a year over the past three years. In the last year, its revenue is down 1.1%.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Aurizon Holdings Limited Been A Good Investment?

Aurizon Holdings Limited has served shareholders reasonably well, with a total return of 14% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Aurizon Holdings (1 is potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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