Shareholders Would Not Be Objecting To DLH Holdings Corp.'s (NASDAQ:DLHC) CEO Compensation And Here's Why

We have been pretty impressed with the performance at DLH Holdings Corp. (NASDAQ:DLHC) recently and CEO Zach Parker deserves a mention for their role in it. Coming up to the next AGM on 10 March 2022, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

View our latest analysis for DLH Holdings

How Does Total Compensation For Zach Parker Compare With Other Companies In The Industry?

Our data indicates that DLH Holdings Corp. has a market capitalization of US$221m, and total annual CEO compensation was reported as US$1.2m for the year to September 2021. That's a notable increase of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$479k.

In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was US$1.2m. This suggests that DLH Holdings remunerates its CEO largely in line with the industry average. What's more, Zach Parker holds US$8.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	US$479k	US$465k	40%
Other	US$707k	US$580k	60%
Total Compensation	US$1.2m	US$1.0m	100%

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. DLH Holdings pays out 40% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at DLH Holdings Corp.'s Growth Numbers

DLH Holdings Corp.'s earnings per share (EPS) grew 33% per year over the last three years. Its revenue is up 59% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 DLH Holdings Corp. Been A Good Investment?

We think that the total shareholder return of 180%, over three years, would leave most DLH Holdings Corp. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for DLH Holdings that investors should look into moving forward.

Important note: DLH Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.