A Look At Good Spirits Hospitality's (NZSE:GSH) CEO Remuneration

Simply Wall St
February 01, 2021
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This article will reflect on the compensation paid to Geoff Tuttle who has served as CEO of Good Spirits Hospitality Limited (NZSE:GSH) since 2018. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Good Spirits Hospitality

How Does Total Compensation For Geoff Tuttle Compare With Other Companies In The Industry?

According to our data, Good Spirits Hospitality Limited has a market capitalization of NZ$4.4m, and paid its CEO total annual compensation worth NZ$380k over the year to June 2020. That's a notable decrease of 10% on last year. We note that the salary portion, which stands at NZ$350.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below NZ$278m, we found that the median total CEO compensation was NZ$563k. This suggests that Geoff Tuttle is paid below the industry median.

Component20202019Proportion (2020)
Salary NZ$350k NZ$300k 92%
Other NZ$30k NZ$123k 8%
Total CompensationNZ$380k NZ$423k100%

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. Good Spirits Hospitality is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

NZSE:GSH CEO Compensation February 1st 2021

Good Spirits Hospitality Limited's Growth

Over the last three years, Good Spirits Hospitality Limited has shrunk its earnings per share by 129% per year. It saw its revenue drop 7.7% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Good Spirits Hospitality Limited Been A Good Investment?

Most shareholders would probably be pleased with Good Spirits Hospitality Limited for providing a total return of 43% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As previously discussed, Geoff is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. And while EPS growth is negative, shareholder returns have been healthy recently. So, while it would be nice to have better EPS growth, our analysis suggests CEO compensation is quite modest.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Good Spirits Hospitality (3 shouldn't be ignored!) that you should be aware of before investing here.

Important note: Good Spirits Hospitality is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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