In 2016 Andrew Burnes was appointed CEO of Helloworld Travel Limited (ASX:HLO). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Andrew Burnes’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Helloworld Travel Limited has a market cap of AU$174m, and reported total annual CEO compensation of AU$603k for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$570k. We looked at a group of companies with market capitalizations under AU$315m, and the median CEO total compensation was AU$388k.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 73% of total compensation represents salary and 27% is other remuneration. So it seems like there isn’t a significant difference between Helloworld Travel and the broader market, in terms of salary allocation in the overall compensation package.
Thus we can conclude that Andrew Burnes receives more in total compensation than the median of a group of companies in the same market, and of similar size to Helloworld Travel Limited. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see a visual representation of the CEO compensation at Helloworld Travel, below.
Is Helloworld Travel Limited Growing?
Helloworld Travel Limited has seen earnings per share (EPS) move positively by an average of 22% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 11%.
This demonstrates that the company has been improving recently. A good result. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.
Has Helloworld Travel Limited Been A Good Investment?
With a three year total loss of 59%, Helloworld Travel Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Helloworld Travel Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. On another note, we’ve spotted 3 warning signs 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 freelist of interesting companies, that have HIGH return on equity and low debt.
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