Our View On Harvey Norman Holdings' (ASX:HVN) CEO Pay

This article will reflect on the compensation paid to Katie Page who has served as CEO of Harvey Norman Holdings Limited (ASX:HVN) since 1999. This analysis will also assess whether Harvey Norman Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Harvey Norman Holdings

Comparing Harvey Norman Holdings Limited's CEO Compensation With the industry

According to our data, Harvey Norman Holdings Limited has a market capitalization of AU$5.8b, and paid its CEO total annual compensation worth AU$3.3m over the year to June 2020. We note that's an increase of 9.5% above last year. Notably, the salary which is AU$1.96m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from AU$2.6b to AU$8.3b, we found that the median CEO total compensation was AU$2.2m. Accordingly, our analysis reveals that Harvey Norman Holdings Limited pays Katie Page north of the industry median. What's more, Katie Page holds AU$95m 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 55% of total compensation represents salary and 45% is other remuneration. Our data reveals that Harvey Norman Holdings allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Harvey Norman Holdings Limited's Growth Numbers

Harvey Norman Holdings Limited saw earnings per share stay pretty flat over the last three years. It achieved revenue growth of 2.7% over the last year.

The lack of EPS growth is certainly unimpressive. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Harvey Norman Holdings Limited Been A Good Investment?

We think that the total shareholder return of 42%, over three years, would leave most Harvey Norman Holdings Limited shareholders smiling. 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, Katie 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 Katie is generously paid, stockholders would want to see some EPS growth before agreeing that a raise is a good idea.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Harvey Norman Holdings we think you should know about.

Switching gears from Harvey Norman Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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