How Much Did Hennessy Advisors' (NASDAQ:HNNA) CEO Pocket Last Year?

This article will reflect on the compensation paid to Neil Hennessy who has served as CEO of Hennessy Advisors, Inc. (NASDAQ:HNNA) since 1989. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Hennessy Advisors.

Check out our latest analysis for Hennessy Advisors

Comparing Hennessy Advisors, Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Hennessy Advisors, Inc. has a market capitalization of US$62m, and reported total annual CEO compensation of US$1.6m for the year to September 2020. That's a notable decrease of 22% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$314k.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$400k. Accordingly, our analysis reveals that Hennessy Advisors, Inc. pays Neil Hennessy north of the industry median. Moreover, Neil Hennessy also holds US$18m worth of Hennessy Advisors 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 14% of total compensation represents salary and 86% is other remuneration. According to our research, Hennessy Advisors has allocated a higher percentage of pay to salary in comparison to the wider industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Hennessy Advisors, Inc.'s Growth

Hennessy Advisors, Inc. has reduced its earnings per share by 18% a year over the last three years. In the last year, its revenue is down 22%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hennessy Advisors, Inc. Been A Good Investment?

Since shareholders would have lost about 39% over three years, some Hennessy Advisors, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Hennessy Advisors, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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. We identified 2 warning signs for Hennessy Advisors (1 can't be ignored!) that you should be aware of before investing here.

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. 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.
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