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Should You Worry About Houlihan Lokey, Inc.'s (NYSE:HLI) CEO Pay?

Simply Wall St
·3 min read

Scott Beiser became the CEO of Houlihan Lokey, Inc. (NYSE:HLI) in 2003. First, this article will compare CEO compensation with compensation at similar sized companies. 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.

See our latest analysis for Houlihan Lokey

How Does Scott Beiser's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Houlihan Lokey, Inc. has a market cap of US$3.0b, and reported total annual CEO compensation of US$4.7m for the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at US$400k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.6m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 11% of total compensation represents salary, while the remainder of 89% is other remuneration. So it seems like there isn't a significant difference between Houlihan Lokey and the broader market, in terms of salary allocation in the overall compensation package.

So Scott Beiser receives a similar amount to the median CEO pay, amongst 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. The graphic below shows how CEO compensation at Houlihan Lokey has changed from year to year.

NYSE:HLI CEO Compensation March 26th 2020
NYSE:HLI CEO Compensation March 26th 2020

Is Houlihan Lokey, Inc. Growing?

Over the last three years Houlihan Lokey, Inc. has seen earnings per share (EPS) move in a positive direction by an average of 13% per year (using a line of best fit). In the last year, its revenue is up 11%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Houlihan Lokey, Inc. Been A Good Investment?

Boasting a total shareholder return of 43% over three years, Houlihan Lokey, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Scott Beiser is paid around the same as most CEOs of similar size companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Looking into other areas, we've picked out 2 warning signs for Houlihan Lokey that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.