Increases to Tourism Holdings Limited's (NZSE:THL) CEO Compensation Might Cool off for now

Key Insights

• Tourism Holdings' Annual General Meeting to take place on 17th of October
• Total pay for CEO Grant Webster includes NZ$997.2k salary
• The total compensation is 146% higher than the average for the industry
• Over the past three years, Tourism Holdings' EPS grew by 90% and over the past three years, the total loss to shareholders 28%

Shareholders of Tourism Holdings Limited (NZSE:THL) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 17th of October could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Tourism Holdings

Comparing Tourism Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Tourism Holdings Limited has a market capitalization of NZ$396m, and reported total annual CEO compensation of NZ$1.6m for the year to June 2024. That's a notable decrease of 35% on last year. In particular, the salary of NZ$997.2k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the New Zealand Transportation industry with market capitalizations between NZ$164m and NZ$658m, we discovered that the median CEO total compensation of that group was NZ$669k. This suggests that Grant Webster is paid more than the median for the industry. Moreover, Grant Webster also holds NZ$4.7m worth of Tourism Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 47% of total compensation represents salary and 53% is other remuneration. Tourism Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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 Tourism Holdings Limited's Growth Numbers

Tourism Holdings Limited has seen its earnings per share (EPS) increase by 90% a year over the past three years. Its revenue is up 39% 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. 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 Tourism Holdings Limited Been A Good Investment?

Since shareholders would have lost about 28% over three years, some Tourism Holdings Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues 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 an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Tourism Holdings you should be aware of, and 1 of them shouldn't be ignored.

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.