Shareholders May Be More Conservative With Hennessy Advisors, Inc.'s (NASDAQ:HNNA) CEO Compensation For Now

Share price growth at Hennessy Advisors, Inc. (NASDAQ:HNNA) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. Some of these issues will occupy shareholders' minds as the AGM rolls around on 11 February 2022. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Hennessy Advisors

How Does Total Compensation For Neil Hennessy Compare With Other Companies In The Industry?

According to our data, Hennessy Advisors, Inc. has a market capitalization of US$77m, and paid its CEO total annual compensation worth US$1.6m over the year to September 2021. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$350k.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$357k. This suggests that Neil Hennessy is paid more than the median for the industry. Furthermore, Neil Hennessy directly owns US$21m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	US$350k	US$314k	22%
Other	US$1.3m	US$1.3m	78%
Total Compensation	US$1.6m	US$1.6m	100%

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Hennessy Advisors is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Hennessy Advisors, Inc.'s Growth Numbers

Hennessy Advisors, Inc. has reduced its earnings per share by 26% a year over the last three years. Its revenue is down 1.9% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Hennessy Advisors, Inc. Been A Good Investment?

With a total shareholder return of 4.9% over three years, Hennessy Advisors, Inc. has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Hennessy Advisors (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.