In 2016 David John Lenz was appointed CEO of Hills Limited (ASX:HIL). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does David John Lenz's Compensation Compare With Similar Sized Companies?
Our data indicates that Hills Limited is worth AU$87m, and total annual CEO compensation was reported as AU$409k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$328k. We examined a group of similar sized companies, with market capitalizations of below AU$290m. The median CEO total compensation in that group is AU$381k.
So David John Lenz is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see, below, how CEO compensation at Hills has changed over time.
Is Hills Limited Growing?
Hills Limited has increased its earnings per share (EPS) by an average of 104% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 1.6%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Hills Limited Been A Good Investment?
With a total shareholder return of 6.8% over three years, Hills Limited has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
Remuneration for David John Lenz is close enough to the median pay for a CEO of a similar sized company .
Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. So upon reflection one could argue that the CEO pay is quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Hills shares (free trial).
If you want to buy a stock that is better than Hills, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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