We Think Shareholders May Want To Consider A Review Of Steel & Tube Holdings Limited's (NZSE:STU) CEO Compensation Package

Key Insights

• Steel & Tube Holdings will host its Annual General Meeting on 28th of November
• Total pay for CEO Mark Malpass includes NZ$1.05m salary
• The overall pay is 264% above the industry average
• Steel & Tube Holdings' EPS declined by 45% over the past three years while total shareholder loss over the past three years was 17%

Steel & Tube Holdings Limited (NZSE:STU) has not performed well recently and CEO Mark Malpass will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28th of November. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Steel & Tube Holdings

Comparing Steel & Tube Holdings Limited's CEO Compensation With The Industry

Our data indicates that Steel & Tube Holdings Limited has a market capitalization of NZ$148m, and total annual CEO compensation was reported as NZ$1.6m for the year to June 2024. We note that's a decrease of 22% compared to last year. We note that the salary portion, which stands at NZ$1.05m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the New Zealand Metals and Mining industry with market capitalizations below NZ$341m, we found that the median total CEO compensation was NZ$430k. Accordingly, our analysis reveals that Steel & Tube Holdings Limited pays Mark Malpass north of the industry median. Furthermore, Mark Malpass directly owns NZ$904k worth of shares in the company.

Component	2024	2023	Proportion (2024)
Salary	NZ$1.0m	NZ$876k	67%
Other	NZ$516k	NZ$1.1m	33%
Total Compensation	NZ$1.6m	NZ$2.0m	100%

On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. Steel & Tube Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Steel & Tube Holdings Limited's Growth Numbers

Steel & Tube Holdings Limited has reduced its earnings per share by 45% a year over the last three years. It saw its revenue drop 19% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Steel & Tube Holdings Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Steel & Tube Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Steel & Tube Holdings that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.