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Is Houston We Have Limited's (ASX:HWH) CEO Pay Justified?

Simply Wall St

In 2016, Elizabeth Whitelock was appointed CEO of Houston We Have Limited (ASX:HWH). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Houston We Have

How Does Elizabeth Whitelock's Compensation Compare With Similar Sized Companies?

According to our data, Houston We Have Limited has a market capitalization of AU$6.4m, and paid its CEO total annual compensation worth AU$121k over the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$99k. We took a group of companies with market capitalizations below AU$311m, and calculated the median CEO total compensation to be AU$396k.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 67% of total compensation represents salary and 33% is other remuneration. Houston We Have is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation

Most shareholders would consider it a positive that Elizabeth Whitelock takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. The graphic below shows how CEO compensation at Houston We Have has changed from year to year.

ASX:HWH CEO Compensation May 2nd 2020

Is Houston We Have Limited Growing?

On average over the last three years, Houston We Have Limited has seen earnings per share (EPS) move in a favourable direction by 119% each year (using a line of best fit). It achieved revenue growth of 3990% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Houston We Have Limited Been A Good Investment?

With a three year total loss of 93%, Houston We Have Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Houston We Have Limited is currently paying its CEO below what is normal for companies of its size.

Many would consider this to indicate that the pay is modest since the business is growing. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. We're not critical of the remuneration Elizabeth Whitelock receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. Shifting gears from CEO pay for a second, we've spotted 5 warning signs for Houston We Have you should be aware of, and 3 of them shouldn't be ignored.

Important note: Houston We Have may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.