Here's Why Shareholders May Want To Be Cautious With Increasing HMC Capital Limited's (ASX:HMC) CEO Pay Packet

Key Insights

• HMC Capital's Annual General Meeting to take place on 27th of November
• Total pay for CEO David Di Pilla includes AU$941.8k salary
• The total compensation is 32% higher than the average for the industry
• Over the past three years, HMC Capital's EPS grew by 70% and over the past three years, the total shareholder return was 65%

Under the guidance of CEO David Di Pilla, HMC Capital Limited (ASX:HMC) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 27th of November. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for HMC Capital

How Does Total Compensation For David Di Pilla Compare With Other Companies In The Industry?

Our data indicates that HMC Capital Limited has a market capitalization of AU$4.8b, and total annual CEO compensation was reported as AU$2.4m for the year to June 2024. That's a notable increase of 8.3% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$942k.

In comparison with other companies in the Australian Capital Markets industry with market capitalizations ranging from AU$3.1b to AU$9.8b, the reported median CEO total compensation was AU$1.8m. Hence, we can conclude that David Di Pilla is remunerated higher than the industry median. Moreover, David Di Pilla also holds AU$104m worth of HMC Capital stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	AU$942k	AU$870k	39%
Other	AU$1.4m	AU$1.3m	61%
Total Compensation	AU$2.4m	AU$2.2m	100%

On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. In HMC Capital's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at HMC Capital Limited's Growth Numbers

HMC Capital Limited's earnings per share (EPS) grew 70% per year over the last three years. In the last year, its revenue is up 7.3%.

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 HMC Capital Limited Been A Good Investment?

We think that the total shareholder return of 65%, over three years, would leave most HMC Capital Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for HMC Capital that investors should be aware of in a dynamic business environment.

Important note: HMC Capital 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. 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.