It's Unlikely That The CEO Of Harvey Norman Holdings Limited (ASX:HVN) Will See A Huge Pay Rise This Year

editorial-team@simplywallst.com (Simply Wall St)

Tue, Nov 21, 2023, 9:11 PM 4 min read

Harvey Norman Holdings will host its Annual General Meeting on 29th of November
Total pay for CEO Katie Page includes AU$2.12m salary
The total compensation is similar to the average for the industry
Harvey Norman Holdings' EPS grew by 3.4% over the past three years while total shareholder loss over the past three years was 2.0%

In the past three years, shareholders of Harvey Norman Holdings Limited (ASX:HVN) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 29th of November. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Harvey Norman Holdings

Comparing Harvey Norman Holdings Limited's CEO Compensation With The Industry

Our data indicates that Harvey Norman Holdings Limited has a market capitalization of AU$4.7b, and total annual CEO compensation was reported as AU$3.7m for the year to June 2023. That's slightly lower by 5.5% over the previous year. We note that the salary of AU$2.12m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar companies from the Australian Multiline Retail industry with market caps ranging from AU$3.0b to AU$9.7b, we found that the median CEO total compensation was AU$3.7m. This suggests that Harvey Norman Holdings remunerates its CEO largely in line with the industry average. Furthermore, Katie Page directly owns AU$76m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$2.1m	AU$2.0m	57%
Other	AU$1.6m	AU$1.9m	43%
Total Compensation	AU$3.7m	AU$3.9m	100%

Speaking on an industry level, nearly 37% of total compensation represents salary, while the remainder of 63% is other remuneration. Harvey Norman Holdings pays out 57% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation — ASX:HVN CEO Compensation November 22nd 2023

A Look at Harvey Norman Holdings Limited's Growth Numbers

Harvey Norman Holdings Limited has seen its earnings per share (EPS) increase by 3.4% a year over the past three years. Its revenue is down 1.1% over the previous year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. 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 Harvey Norman Holdings Limited Been A Good Investment?

With a three year total loss of 2.0% for the shareholders, Harvey Norman Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which is concerning) in Harvey Norman Holdings we think you should know about.

Important note: Harvey Norman Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.