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Does Hot Chili Limited's (ASX:HCH) CEO Pay Matter?

Simply Wall St

The CEO of Hot Chili Limited (ASX:HCH) is Christian Easterday. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Hot Chili

How Does Christian Easterday's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Hot Chili Limited has a market cap of AU$64m, and reported total annual CEO compensation of AU$298k for the year to June 2019. That's a fairly small increase of 5.1% on year before. We think total compensation is more important but we note that the CEO salary is lower, at AU$259k. We took a group of companies with market capitalizations below AU$290m, and calculated the median CEO total compensation to be AU$380k.

So Christian Easterday is paid around the average of the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see a visual representation of the CEO compensation at Hot Chili, below.

ASX:HCH CEO Compensation, December 23rd 2019

Is Hot Chili Limited Growing?

Hot Chili Limited has increased its earnings per share (EPS) by an average of 64% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 45%.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hot Chili Limited Been A Good Investment?

Hot Chili Limited has served shareholders reasonably well, with a total return of 26% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Remuneration for Christian Easterday 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. So you may want to check if insiders are buying Hot Chili shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.