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Here's Why Domain Holdings Australia Limited's (ASX:DHG) CEO Compensation Is The Least Of Shareholders' Concerns

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  • DHG.AX

Domain Holdings Australia Limited (ASX:DHG) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 03 November 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Domain Holdings Australia

Comparing Domain Holdings Australia Limited's CEO Compensation With the industry

According to our data, Domain Holdings Australia Limited has a market capitalization of AU$3.4b, and paid its CEO total annual compensation worth AU$2.7m over the year to June 2021. That's a notable increase of 10% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$964k.

On comparing similar companies from the same industry with market caps ranging from AU$2.6b to AU$8.5b, we found that the median CEO total compensation was AU$3.2m. So it looks like Domain Holdings Australia compensates Jason Pellegrino in line with the median for the industry. Moreover, Jason Pellegrino also holds AU$4.2m worth of Domain Holdings Australia stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2021

2020

Proportion (2021)

Salary

AU$964k

AU$1.1m

35%

Other

AU$1.8m

AU$1.4m

65%

Total Compensation

AU$2.7m

AU$2.5m

100%

On an industry level, around 48% of total compensation represents salary and 52% is other remuneration. Domain Holdings Australia 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

Domain Holdings Australia Limited's Growth

Over the last three years, Domain Holdings Australia Limited has shrunk its earnings per share by 8.5% per year. It achieved revenue growth of 8.6% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Domain Holdings Australia Limited Been A Good Investment?

Boasting a total shareholder return of 138% over three years, Domain Holdings Australia Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

So you may want to check if insiders are buying Domain Holdings Australia shares with their own money (free access).

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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