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Here's Why It's Unlikely That Air New Zealand Limited's (NZSE:AIR) CEO Will See A Pay Rise This Year

·3 min read

Shareholders will probably not be too impressed with the underwhelming results at Air New Zealand Limited (NZSE:AIR) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 22 September 2022. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Air New Zealand

How Does Total Compensation For Greg Foran Compare With Other Companies In The Industry?

At the time of writing, our data shows that Air New Zealand Limited has a market capitalization of NZ$2.3b, and reported total annual CEO compensation of NZ$3.6m for the year to June 2022. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at NZ$1.7m.

On comparing similar companies from the same industry with market caps ranging from NZ$1.7b to NZ$5.3b, we found that the median CEO total compensation was NZ$3.6m. From this we gather that Greg Foran is paid around the median for CEOs in the industry. What's more, Greg Foran holds NZ$2.8m worth of shares in the company in their own name.

Component

2022

2021

Proportion (2022)

Salary

NZ$1.7m

NZ$1.7m

46%

Other

NZ$1.9m

NZ$1.9m

54%

Total Compensation

NZ$3.6m

NZ$3.6m

100%

On an industry level, roughly 32% of total compensation represents salary and 68% is other remuneration. Air New Zealand pays out 46% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at Air New Zealand Limited's Growth Numbers

Air New Zealand Limited has reduced its earnings per share by 64% a year over the last three years. Its revenue is up 8.7% over the last year.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Air New Zealand Limited Been A Good Investment?

With a total shareholder return of -59% over three years, Air New Zealand Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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. We've identified 1 warning sign for Air New Zealand that investors should be aware of in a dynamic business environment.

Switching gears from Air New Zealand, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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