Increases to SkyCity Entertainment Group Limited's (NZSE:SKC) CEO Compensation Might Cool off for now
Key Insights
SkyCity Entertainment Group to hold its Annual General Meeting on 26th of October
Salary of NZ$1.50m is part of CEO Michael Ahearne's total remuneration
The total compensation is 103% higher than the average for the industry
Over the past three years, SkyCity Entertainment Group's EPS fell by 69% and over the past three years, the total loss to shareholders 30%
In the past three years, the share price of SkyCity Entertainment Group Limited (NZSE:SKC) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also poor, despite revenues growing. Shareholders will have a chance to take their concerns to the board at the next AGM on 26th of October and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's why we think shareholders should hold off on a raise for the CEO at the moment.
See our latest analysis for SkyCity Entertainment Group
How Does Total Compensation For Michael Ahearne Compare With Other Companies In The Industry?
At the time of writing, our data shows that SkyCity Entertainment Group Limited has a market capitalization of NZ$1.5b, and reported total annual CEO compensation of NZ$3.0m for the year to June 2023. That's a fairly small increase of 3.9% over the previous year. We note that the salary of NZ$1.50m makes up a sizeable portion of the total compensation received by the CEO.
On comparing similar companies from the New Zealand Hospitality industry with market caps ranging from NZ$686m to NZ$2.7b, we found that the median CEO total compensation was NZ$1.5m. This suggests that Michael Ahearne is paid more than the median for the industry. Furthermore, Michael Ahearne directly owns NZ$964k worth of shares in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | NZ$1.5m | NZ$1.5m | 51% |
Other | NZ$1.5m | NZ$1.4m | 49% |
Total Compensation | NZ$3.0m | NZ$2.9m | 100% |
Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. SkyCity Entertainment Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
SkyCity Entertainment Group Limited's Growth
SkyCity Entertainment Group Limited has reduced its earnings per share by 69% a year over the last three years. In the last year, its revenue is up 54%.
Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has SkyCity Entertainment Group Limited Been A Good Investment?
The return of -30% over three years would not have pleased SkyCity Entertainment Group Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for SkyCity Entertainment Group (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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.
