Shareholders Will Probably Be Cautious Of Increasing Air New Zealand Limited's (NZSE:AIR) CEO Compensation At The Moment

Key Insights

• Air New Zealand will host its Annual General Meeting on 26th of September
• CEO Greg Foran's total compensation includes salary of NZ$1.80m
• The overall pay is comparable to the industry average
• Air New Zealand's total shareholder return over the past three years was 0.9% while its EPS grew by 57% over the past three years

Performance at Air New Zealand Limited (NZSE:AIR) has been reasonably good and CEO Greg Foran 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 26th of September. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

Check out our latest analysis for Air New Zealand

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

According to our data, Air New Zealand Limited has a market capitalization of NZ$2.5b, and paid its CEO total annual compensation worth NZ$4.0m over the year to June 2023. That's a notable increase of 9.8% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at NZ$1.8m.

On examining similar-sized companies in the New Zealand Airlines industry with market capitalizations between NZ$1.7b and NZ$5.4b, we discovered that the median CEO total compensation of that group was NZ$5.4m. So it looks like Air New Zealand compensates Greg Foran in line with the median for the industry. What's more, Greg Foran holds NZ$3.1m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	NZ$1.8m	NZ$1.7m	45%
Other	NZ$2.2m	NZ$1.9m	55%
Total Compensation	NZ$4.0m	NZ$3.6m	100%

Speaking on an industry level, nearly 32% of total compensation represents salary, while the remainder of 68% is other remuneration. According to our research, Air New Zealand has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Air New Zealand Limited's Growth Numbers

Air New Zealand Limited has seen its earnings per share (EPS) increase by 57% a year over the past three years. It achieved revenue growth of 132% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Air New Zealand Limited Been A Good Investment?

Air New Zealand Limited has generated a total shareholder return of 0.9% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

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. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

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. We did our research and spotted 1 warning sign for Air New Zealand that investors should look into moving forward.

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.