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Shareholders May Be More Conservative With HRL Holdings Limited's (ASX:HRL) CEO Compensation For Now

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The underwhelming share price performance of HRL Holdings Limited (ASX:HRL) in the past three years would have disappointed many shareholders. 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 19 October 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 HRL Holdings

How Does Total Compensation For Steven Dabelstein Compare With Other Companies In The Industry?

Our data indicates that HRL Holdings Limited has a market capitalization of AU$56m, and total annual CEO compensation was reported as AU$496k for the year to June 2021. Notably, that's an increase of 23% over the year before. We note that the salary portion, which stands at AU$300.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$272m, we found that the median total CEO compensation was AU$338k. This suggests that Steven Dabelstein is paid more than the median for the industry. Moreover, Steven Dabelstein also holds AU$242k worth of HRL Holdings stock directly under their own name.

Component

2021

2020

Proportion (2021)

Salary

AU$300k

AU$285k

60%

Other

AU$196k

AU$119k

40%

Total Compensation

AU$496k

AU$404k

100%

On an industry level, roughly 54% of total compensation represents salary and 46% is other remuneration. HRL Holdings pays out 60% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

HRL Holdings Limited's Growth

HRL Holdings Limited's earnings per share (EPS) grew 58% per year over the last three years. It achieved revenue growth of 5.5% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 HRL Holdings Limited Been A Good Investment?

The return of -36% over three years would not have pleased HRL Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for HRL Holdings 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. 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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