This article will reflect on the compensation paid to Andrew Hansen who has served as CEO of Hansen Technologies Limited (ASX:HSN) since 1993. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Andrew Hansen Compare With Other Companies In The Industry?
According to our data, Hansen Technologies Limited has a market capitalization of AU$749m, and paid its CEO total annual compensation worth AU$1.8m over the year to June 2020. Notably, that's an increase of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$861k.
On examining similar-sized companies in the industry with market capitalizations between AU$260m and AU$1.0b, we discovered that the median CEO total compensation of that group was AU$1.1m. This suggests that Andrew Hansen is paid more than the median for the industry. Moreover, Andrew Hansen also holds AU$133m worth of Hansen Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that Hansen Technologies allocates a smaller portion of compensation to salary 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.
Hansen Technologies Limited's Growth
Over the last three years, Hansen Technologies Limited has not seen its earnings per share change much, though they have deteriorated slightly. It achieved revenue growth of 30% over the last year.
The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Hansen Technologies Limited Been A Good Investment?
With a total shareholder return of 7.1% over three years, Hansen Technologies Limited has done okay by shareholders. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we touched on above, Hansen Technologies Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, revenue figures for the company are growing at a nice pace over the last year. Although shareholder returns are also growing during this time, they have not impressed us as much. Importantly, EPS growth is negative, a worrying trend. All things considered, we don't think CEO compensation is unfair, though shareholders will likely want to see an overall improvement in performance before any potential raise.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Hansen Technologies that you should be aware of before investing.
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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