Stock Analysis

Why We Think Aurizon Holdings Limited's (ASX:AZJ) CEO Compensation Is Not Excessive At All

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Performance at Aurizon Holdings Limited (ASX:AZJ) has been reasonably good and CEO Tony Harding has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 12 October 2021. Here is our take on why we think the CEO compensation looks appropriate.

See our latest analysis for Aurizon Holdings

Comparing Aurizon Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Aurizon Holdings Limited has a market capitalization of AU$7.2b, and reported total annual CEO compensation of AU$4.9m for the year to June 2021. That's a notable increase of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.7m.

On comparing similar companies from the same industry with market caps ranging from AU$5.5b to AU$16b, we found that the median CEO total compensation was AU$6.0m. From this we gather that Tony Harding is paid around the median for CEOs in the industry. What's more, Tony Harding holds AU$156k worth of shares in the company in their own name.

Component20212020Proportion (2021)
Salary AU$1.7m AU$1.7m 34%
Other AU$3.2m AU$2.6m 66%
Total CompensationAU$4.9m AU$4.3m100%

On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. In Aurizon Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ASX:AZJ CEO Compensation October 5th 2021

Aurizon Holdings Limited's Growth

Over the past three years, Aurizon Holdings Limited has seen its earnings per share (EPS) grow by 5.8% per year. In the last year, its revenue is down 1.1%.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Aurizon Holdings Limited Been A Good Investment?

Aurizon Holdings Limited has served shareholders reasonably well, with a total return of 14% over three years. 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...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay 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 did our research and identified 3 warning signs (and 1 which can't be ignored) in Aurizon Holdings we think you should know about.

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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