This Is Why Harvey Norman Holdings Limited's (ASX:HVN) CEO Compensation Looks Appropriate

CEO Katie Page has done a decent job of delivering relatively good performance at Harvey Norman Holdings Limited (ASX:HVN) 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 24 November 2022. Here is our take on why we think the CEO compensation looks appropriate.

See our latest analysis for Harvey Norman Holdings

How Does Total Compensation For Katie Page Compare With Other Companies In The Industry?

According to our data, Harvey Norman Holdings Limited has a market capitalization of AU$5.1b, and paid its CEO total annual compensation worth AU$3.9m over the year to June 2022. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$2.05m, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from AU$3.0b to AU$9.4b, the reported median CEO total compensation was AU$5.3m. So it looks like Harvey Norman Holdings compensates Katie Page in line with the median for the industry. Moreover, Katie Page also holds AU$82m worth of Harvey Norman Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	AU$2.0m	AU$2.1m	52%
Other	AU$1.9m	AU$1.8m	48%
Total Compensation	AU$3.9m	AU$3.9m	100%

Speaking on an industry level, nearly 38% of total compensation represents salary, while the remainder of 62% is other remuneration. According to our research, Harvey Norman Holdings has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Harvey Norman Holdings Limited's Growth

Over the past three years, Harvey Norman Holdings Limited has seen its earnings per share (EPS) grow by 23% per year. Its revenue is up 1.4% over the last year.

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 Harvey Norman Holdings Limited Been A Good Investment?

Harvey Norman Holdings Limited has generated a total shareholder return of 18% over three years, so most shareholders would 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. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Harvey Norman Holdings (1 can't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.