Here's What We Think About Domain Holdings Australia's (ASX:DHG) CEO Pay

Jason Pellegrino became the CEO of Domain Holdings Australia Limited (ASX:DHG) 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 Domain Holdings Australia

How Does Total Compensation For Jason Pellegrino Compare With Other Companies In The Industry?

Our data indicates that Domain Holdings Australia Limited has a market capitalization of AU$3.1b, and total annual CEO compensation was reported as AU$2.5m for the year to June 2020. That's a modest increase of 4.9% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.1m.

For comparison, other companies in the same industry with market capitalizations ranging between AU$1.3b and AU$4.2b had a median total CEO compensation of AU$2.5m. So it looks like Domain Holdings Australia compensates Jason Pellegrino in line with the median for the industry. Moreover, Jason Pellegrino also holds AU$3.9m worth of Domain Holdings Australia stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 73% of total compensation represents salary, while the remainder of 27% is other remuneration. Domain Holdings Australia sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Domain Holdings Australia Limited's Growth Numbers

Over the last three years, Domain Holdings Australia Limited has shrunk its earnings per share by 81% per year. Its revenue is down 20% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Domain Holdings Australia Limited Been A Good Investment?

We think that the total shareholder return of 88%, over three years, would leave most Domain Holdings Australia Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we touched on above, Domain Holdings Australia 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. Some investors may take issue with this, especially considering shrinking EPS for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We do not think CEO compensation is a problem, but shrinking EPS is undoubtedly an issue that will have to be addressed.

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 Domain Holdings Australia 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.

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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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