This article will reflect on the compensation paid to Kees Weel who has served as CEO of PWR Holdings Limited (ASX:PWH) since 2003. This analysis will also assess whether PWR Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for PWR Holdings
Comparing PWR Holdings Limited's CEO Compensation With the industry
At the time of writing, our data shows that PWR Holdings Limited has a market capitalization of AU$486m, and reported total annual CEO compensation of AU$644k for the year to June 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of AU$450.0k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from AU$259m to AU$1.0b, the reported median CEO total compensation was AU$595k. So it looks like PWR Holdings compensates Kees Weel in line with the median for the industry. What's more, Kees Weel holds AU$49m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$450k | AU$350k | 70% |
| Other | AU$194k | AU$279k | 30% |
| Total Compensation | AU$644k | AU$629k | 100% |
On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. In PWR Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
PWR Holdings Limited's Growth
PWR Holdings Limited has seen its earnings per share (EPS) increase by 12% a year over the past three years. In the last year, its revenue changed by just 0.4%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has PWR Holdings Limited Been A Good Investment?
Most shareholders would probably be pleased with PWR Holdings Limited for providing a total return of 102% over three years. 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...
As we touched on above, PWR Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Indeed, many might consider that Kees is compensated rather modestly, given the solid company performance! Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for PWR Holdings that investors should look into moving forward.
Important note: PWR Holdings 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.
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This article by Simply Wall St is general in nature. 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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About ASX:PWH
PWR Holdings
Engages in the design, prototyping, production, testing, validation, and sale of cooling products and solutions in Australia, the United States, the United Kingdom, Italy, Germany, France, Japan, and internationally.
Flawless balance sheet with reasonable growth potential.
