ASX:HRL Past Future Earnings Mar 31st 18
What’s a reasonable CEO compensation?
Despite the fact that there is no cookie-cutter approach, as compensation should be tailored to the specific company and market, we can evaluate a high-level yardstick to see if HRL is an outlier. This outcome helps investors ask the right question about Dabelstein’s incentive alignment. Normally, an Australian small-cap is worth around $140M, generates earnings of $10M, and remunerates its CEO circa $500,000 per annum. Normally I would look at market cap and earnings as a proxy for performance, however, HRL’s negative earnings reduces the effectiveness of this method. Looking at the range of compensation for small-cap executives, it seems like Dabelstein is remunerated sensibly relative to peers. Overall, even though HRL is unprofitable, it seems like the CEO’s pay is fair.
Next Steps:
Hopefully this article has given you insight on how shareholders should think about HRL’s governance policies such as CEO pay. As an investor, you have the right to understand how the board thinks about management incentives, and also the right to vote for and against substantial CEO pay changes. Governance is a big factor in investing, and I encourage you to dig deeper into those that represent your voice on the board. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:
- Governance: To find out more about HRL’s governance, look through our infographic report of the company’s board and management.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HRL? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.