Here's What We Learned About The CEO Pay At Alpha HPA Limited (ASX:A4N)

Rimas Kairaitis became the CEO of Alpha HPA Limited (ASX:A4N) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Alpha HPA

How Does Total Compensation For Rimas Kairaitis Compare With Other Companies In The Industry?

According to our data, Alpha HPA Limited has a market capitalization of AU$279m, and paid its CEO total annual compensation worth AU$1.0m over the year to June 2020. Notably, that's an increase of 30% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$432k.

In comparison with other companies in the industry with market capitalizations ranging from AU$131m to AU$522m, the reported median CEO total compensation was AU$518k. Hence, we can conclude that Rimas Kairaitis is remunerated higher than the industry median. What's more, Rimas Kairaitis holds AU$2.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. In Alpha HPA'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.

Alpha HPA Limited's Growth

Over the last three years, Alpha HPA Limited has shrunk its earnings per share by 45% per year. It saw its revenue drop 66% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Alpha HPA Limited Been A Good Investment?

Boasting a total shareholder return of 231% over three years, Alpha HPA 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.

In Summary...

As previously discussed, Rimas is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We feel that EPS have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. So while we would not say that Rimas is generously paid, stockholders would want to see some EPS growth before agreeing that a raise is a good idea.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 5 warning signs for Alpha HPA (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Alpha HPA 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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