We Think Some Shareholders May Hesitate To Increase Harvey Norman Holdings Limited's (ASX:HVN) CEO Compensation

Key Insights

• Harvey Norman Holdings to hold its Annual General Meeting on 29th of November
• Salary of AU$2.12m is part of CEO Katie Page's total remuneration
• The total compensation is similar to the average for the industry
• Harvey Norman Holdings' EPS grew by 3.4% over the past three years while total shareholder loss over the past three years was 2.0%

As many shareholders of Harvey Norman Holdings Limited (ASX:HVN) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View 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$4.7b, and paid its CEO total annual compensation worth AU$3.7m over the year to June 2023. That's a slight decrease of 5.5% on the prior year. Notably, the salary which is AU$2.12m, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the Australian Multiline Retail industry with market capitalizations ranging between AU$3.0b and AU$9.7b had a median total CEO compensation of AU$3.7m. This suggests that Harvey Norman Holdings remunerates its CEO largely in line with the industry average. Moreover, Katie Page also holds AU$76m 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	2023	2022	Proportion (2023)
Salary	AU$2.1m	AU$2.0m	57%
Other	AU$1.6m	AU$1.9m	43%
Total Compensation	AU$3.7m	AU$3.9m	100%

Speaking on an industry level, nearly 37% of total compensation represents salary, while the remainder of 63% is other remuneration. Harvey Norman Holdings pays out 57% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Harvey Norman Holdings Limited's Growth

Over the past three years, Harvey Norman Holdings Limited has seen its earnings per share (EPS) grow by 3.4% per year. It saw its revenue drop 1.1% over the last year.

We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Harvey Norman Holdings Limited Been A Good Investment?

Given the total shareholder loss of 2.0% over three years, many shareholders in Harvey Norman Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Harvey Norman Holdings (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

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. 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.