What We Learned About Houlihan Lokey's (NYSE:HLI) CEO Compensation

Simply Wall St
September 15, 2020

This article will reflect on the compensation paid to Scott Beiser who has served as CEO of Houlihan Lokey, Inc. (NYSE:HLI) since 2003. This analysis will also assess whether Houlihan Lokey pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Houlihan Lokey

Comparing Houlihan Lokey, Inc.'s CEO Compensation With the industry

Our data indicates that Houlihan Lokey, Inc. has a market capitalization of US$4.1b, and total annual CEO compensation was reported as US$4.6m for the year to March 2020. 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$500k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$7.3m. Accordingly, Houlihan Lokey pays its CEO under the industry median. Furthermore, Scott Beiser directly owns US$53m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$500k US$400k 11%
Other US$4.1m US$4.3m 89%
Total CompensationUS$4.6m US$4.7m100%

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. It's interesting to note that Houlihan Lokey allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NYSE:HLI CEO Compensation September 15th 2020

Houlihan Lokey, Inc.'s Growth

Houlihan Lokey, Inc.'s earnings per share (EPS) grew 13% per year over the last three years. In the last year, its revenue changed by just 0.5%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Houlihan Lokey, Inc. Been A Good Investment?

We think that the total shareholder return of 68%, over three years, would leave most Houlihan Lokey, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As we touched on above, Houlihan Lokey, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Considering robust EPS growth, we believe Scott to be modestly paid. And given most shareholders are probably very happy with recent shareholder returns, they might even think Scott deserves a raise!

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Houlihan Lokey that investors should think about before committing capital to this stock.

Switching gears from Houlihan Lokey, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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