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

Performance at Shriro Holdings Limited (ASX:SHM) has been reasonably good and CEO Tim Hargreaves has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 24 May 2021. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Shriro Holdings

Comparing Shriro Holdings Limited's CEO Compensation With the industry

According to our data, Shriro Holdings Limited has a market capitalization of AU$91m, and paid its CEO total annual compensation worth AU$1.2m over the year to December 2020. That's a notable increase of 60% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$587k.

On comparing similar-sized companies in the industry with market capitalizations below AU$257m, we found that the median total CEO compensation was AU$478k. Accordingly, our analysis reveals that Shriro Holdings Limited pays Tim Hargreaves north of the industry median. Moreover, Tim Hargreaves also holds AU$270k worth of Shriro Holdings stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	AU$587k	AU$575k	48%
Other	AU$632k	AU$188k	52%
Total Compensation	AU$1.2m	AU$763k	100%

On an industry level, around 81% of total compensation represents salary and 19% is other remuneration. In Shriro Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Shriro Holdings Limited's Growth

Shriro Holdings Limited's earnings per share (EPS) grew 7.8% per year over the last three years. Its revenue is up 11% over the last year.

We would argue that the modest growth in revenue is a notable positive. And the improvement in EPSis modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Shriro Holdings Limited Been A Good Investment?

With a total shareholder return of 11% over three years, Shriro Holdings Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

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. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which shouldn't be ignored) in Shriro Holdings we think you should know about.

Important note: Shriro 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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