We Think Shareholders May Want To Consider A Review Of Spark New Zealand Limited's (NZSE:SPK) CEO Compensation Package

Key Insights

• Spark New Zealand will host its Annual General Meeting on 31st of October
• Total pay for CEO Jolie Hodson includes NZ$1.27m salary
• The total compensation is similar to the average for the industry
• Spark New Zealand's EPS declined by 5.9% over the past three years while total shareholder loss over the past three years was 19%

The results at Spark New Zealand Limited (NZSE:SPK) have been quite disappointing recently and CEO Jolie Hodson bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 31st of October. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Spark New Zealand

Comparing Spark New Zealand Limited's CEO Compensation With The Industry

Our data indicates that Spark New Zealand Limited has a market capitalization of NZ$5.5b, and total annual CEO compensation was reported as NZ$2.2m for the year to June 2024. That's a notable decrease of 18% on last year. In particular, the salary of NZ$1.27m, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the New Zealand Telecom industry with market caps ranging from NZ$3.3b to NZ$11b, we found that the median CEO total compensation was NZ$2.2m. This suggests that Spark New Zealand remunerates its CEO largely in line with the industry average. Moreover, Jolie Hodson also holds NZ$934k worth of Spark New Zealand stock directly under their own name.

Component	2024	2023	Proportion (2024)
Salary	NZ$1.3m	NZ$1.3m	57%
Other	NZ$950k	NZ$1.5m	43%
Total Compensation	NZ$2.2m	NZ$2.7m	100%

On an industry level, around 51% of total compensation represents salary and 49% is other remuneration. Spark New Zealand pays out 57% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Spark New Zealand Limited's Growth

Over the last three years, Spark New Zealand Limited has shrunk its earnings per share by 5.9% per year. Its revenue is down 14% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Spark New Zealand Limited Been A Good Investment?

Given the total shareholder loss of 19% over three years, many shareholders in Spark New Zealand Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which is a bit unpleasant) in Spark New Zealand we think you should know about.

Switching gears from Spark New Zealand, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.