Shareholders May Be More Conservative With Meridian Energy Limited's (NZSE:MEL) CEO Compensation For Now

In the past three years, the share price of Meridian Energy Limited (NZSE:MEL) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 17 October 2022. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out the opportunities and risks within the XX Renewable Energy industry.

Comparing Meridian Energy Limited's CEO Compensation With The Industry

Our data indicates that Meridian Energy Limited has a market capitalization of NZ$12b, and total annual CEO compensation was reported as NZ$2.1m for the year to June 2022. We note that's a small decrease of 7.3% on last year. We note that the salary of NZ$1.09m makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between NZ$7.2b and NZ$22b had a median total CEO compensation of NZ$1.4m. This suggests that Neal Barclay is paid more than the median for the industry. Furthermore, Neal Barclay directly owns NZ$2.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	NZ$1.1m	NZ$1.1m	51%
Other	NZ$1.0m	NZ$1.2m	49%
Total Compensation	NZ$2.1m	NZ$2.3m	100%

On an industry level, around 71% of total compensation represents salary and 29% is other remuneration. It's interesting to note that Meridian Energy allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Meridian Energy Limited's Growth Numbers

Over the past three years, Meridian Energy Limited has seen its earnings per share (EPS) grow by 9.7% per year. It saw its revenue drop 6.6% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Meridian Energy Limited Been A Good Investment?

Since shareholders would have lost about 0.1% over three years, some Meridian Energy Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Meridian Energy that investors should be aware of in a dynamic business environment.

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.