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Is HRL Holdings Limited (ASX:HRL) Overpaying Its CEO?

Simply Wall St

Steven Dabelstein has been the CEO of HRL Holdings Limited (ASX:HRL) since 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for HRL Holdings

How Does Steven Dabelstein's Compensation Compare With Similar Sized Companies?

According to our data, HRL Holdings Limited has a market capitalization of AU$54m, and pays its CEO total annual compensation worth AU$393k. (This number is for the twelve months until June 2019). Notably, that's an increase of 40% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at AU$300k. We took a group of companies with market capitalizations below AU$295m, and calculated the median CEO total compensation to be AU$354k.

So Steven Dabelstein is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

You can see, below, how CEO compensation at HRL Holdings has changed over time.

ASX:HRL CEO Compensation, August 23rd 2019
ASX:HRL CEO Compensation, August 23rd 2019

Is HRL Holdings Limited Growing?

Over the last three years HRL Holdings Limited has shrunk its earnings per share by an average of 117% per year (measured with a line of best fit). Its revenue is up 13% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has HRL Holdings Limited Been A Good Investment?

HRL Holdings Limited has not done too badly by shareholders, with a total return of 2.5%, over three years. 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.

In Summary...

Remuneration for Steven Dabelstein is close enough to the median pay for a CEO of a similar sized company .

We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. This contrasts with the growth in CEO remuneration. We're not saying the CEO pay is too generous, but it's probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. So you may want to check if insiders are buying HRL Holdings 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.

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.

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. Thank you for reading.