Most Shareholders Will Probably Find That The CEO Compensation For Good Spirits Hospitality Limited (NZSE:GSH) Is Reasonable

The share price of Good Spirits Hospitality Limited (NZSE:GSH) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 19 December 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Good Spirits Hospitality

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

Our data indicates that Good Spirits Hospitality Limited has a market capitalization of NZ$4.6m, and total annual CEO compensation was reported as NZ$350k for the year to June 2021. That's a slight decrease of 7.9% on the prior year. Notably, the salary of NZ$350k is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations under NZ$295m, the reported median total CEO compensation was NZ$440k. So it looks like Good Spirits Hospitality compensates Geoff Tuttle in line with the median for the industry. Moreover, Geoff Tuttle also holds NZ$94k worth of Good Spirits Hospitality stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	NZ$350k	NZ$350k	100%
Other	-	NZ$30k	-
Total Compensation	NZ$350k	NZ$380k	100%

On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. At the company level, Good Spirits Hospitality pays Geoff Tuttle solely through a salary, preferring to go down a conventional route. 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.

A Look at Good Spirits Hospitality Limited's Growth Numbers

Over the last three years, Good Spirits Hospitality Limited has shrunk its earnings per share by 95% per year. Revenue was pretty flat on last year.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Good Spirits Hospitality Limited Been A Good Investment?

With a total shareholder return of 13% over three years, Good Spirits Hospitality Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Good Spirits Hospitality pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Good Spirits Hospitality that investors should think about before committing capital to this stock.

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. 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.