This article will reflect on the compensation paid to Nick Grayston who has served as CEO of The Warehouse Group Limited (NZSE:WHS) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Warehouse Group.
Comparing The Warehouse Group Limited’s CEO Compensation With the industry
At the time of writing, our data shows that The Warehouse Group Limited has a market capitalization of NZ$1.2b, and reported total annual CEO compensation of NZ$2.9m for the year to August 2020. Notably, that’s an increase of 45% over the year before. In particular, the salary of NZ$1.46m, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from NZ$552m to NZ$2.2b, we found that the median CEO total compensation was NZ$738k. Accordingly, our analysis reveals that The Warehouse Group Limited pays Nick Grayston north of the industry median.
Speaking on an industry level, nearly 51% of total compensation represents salary, while the remainder of 49% is other remuneration. Warehouse Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at The Warehouse Group Limited’s Growth Numbers
The Warehouse Group Limited has reduced its earnings per share by 14% a year over the last three years. Its revenue is up 3.3% over the last year.
Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn’t enough to make us overlook the disappointing change in EPS. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what’s coming up next but if you want to peer into the company’s future you might be interested in this free visualization of analyst forecasts.
Has The Warehouse Group Limited Been A Good Investment?
Boasting a total shareholder return of 101% over three years, The Warehouse Group Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we noted earlier, Warehouse Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. The company isn’t growing EPS, but shareholder returns have been impressive over the last three years. So while we don’t think, Nick is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That’s why we did some digging and identified 2 warning signs for Warehouse Group that you should be aware of before investing.
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. 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.
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