The share price of Haynes International, Inc. (NASDAQ:HAYN) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 22 February 2022. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Comparing Haynes International, Inc.'s CEO Compensation With the industry
Our data indicates that Haynes International, Inc. has a market capitalization of US$481m, and total annual CEO compensation was reported as US$2.5m for the year to September 2021. Notably, that's an increase of 22% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$604k.
In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.1m. Hence, we can conclude that Michael Shor is remunerated higher than the industry median. Moreover, Michael Shor also holds US$2.9m worth of Haynes International stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 33% of total compensation represents salary, while the remainder of 67% is other remuneration. It's interesting to note that Haynes International 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.
A Look at Haynes International, Inc.'s Growth Numbers
Over the last three years, Haynes International, Inc. has shrunk its earnings per share by 66% per year. Its revenue is up 6.0% over the last year.
Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Haynes International, Inc. Been A Good Investment?
With a total shareholder return of 25% over three years, Haynes International, Inc. shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
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 1 warning sign for Haynes International that investors should look into moving forward.
Important note: Haynes International 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.