Here's Why Mercury NZ Limited's (NZSE:MCY) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Mercury NZ to hold its Annual General Meeting on 19th of September
• Salary of NZ$1.39m is part of CEO Vince James Hawksworth's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Mercury NZ's EPS fell by 22% and over the past three years, the total shareholder return was 38%

Under the guidance of CEO Vince James Hawksworth, Mercury NZ Limited (NZSE:MCY) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 19th of September. Here is our take on why we think the CEO compensation looks appropriate.

See our latest analysis for Mercury NZ

How Does Total Compensation For Vince James Hawksworth Compare With Other Companies In The Industry?

At the time of writing, our data shows that Mercury NZ Limited has a market capitalization of NZ$8.6b, and reported total annual CEO compensation of NZ$3.4m for the year to June 2023. We note that's an increase of 62% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at NZ$1.4m.

For comparison, other companies in the New Zealand Electric Utilities industry with market capitalizations ranging between NZ$6.8b and NZ$20b had a median total CEO compensation of NZ$3.8m. From this we gather that Vince James Hawksworth is paid around the median for CEOs in the industry. Furthermore, Vince James Hawksworth directly owns NZ$1.6m worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	NZ$1.4m	NZ$1.3m	41%
Other	NZ$2.0m	NZ$808k	59%
Total Compensation	NZ$3.4m	NZ$2.1m	100%

Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. Mercury NZ pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Mercury NZ Limited's Growth

Mercury NZ Limited has reduced its earnings per share by 22% a year over the last three years. Its revenue is up 25% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Mercury NZ Limited Been A Good Investment?

Most shareholders would probably be pleased with Mercury NZ Limited for providing a total return of 38% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Although the company has performed relatively well, we still think there are some areas that could be improved. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Mercury NZ (1 is a bit unpleasant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.