Here’s why shareholders may want to be cautious with Steel & Tube Holdings Limited CEO salary increase (NZSE: STU)
As many shareholders of Steel & Tube Holdings Limited (NZSE: STU) knows, they haven’t made a profit on their investment in the past three years. What is unusual, however, is that EPS growth has been positive, suggesting that the stock price has diverged from fundamentals. The general meeting of September 30, 2021 could be an opportunity for shareholders to bring these concerns to the attention of the board of directors. Voting on resolutions such as executive compensation and other matters could also be a way to influence management. We believe shareholders may be reluctant to increase CEO compensation at this time, based on our analysis below.
See our latest review for Steel & Tube Holdings
Steel & Tube Holdings Limited CEO Compensation Comparison with Industry
Our data indicates that Steel & Tube Holdings Limited has a market capitalization of NZ $ 172 million and the CEO’s total annual compensation has been reported at NZ $ 994,000 for the year through June 2021. We note that this is an increase of 41% compared to last year. In particular, the salary of NZ $ 721.1,000 represents a huge portion of the total compensation paid to the CEO.
Comparing similarly sized companies in the industry with market capitalizations below NZ $ 285 million, we found that the median total CEO compensation was NZ $ 316,000. As a result, our analysis reveals that Steel & Tube Holdings Limited pays Mark Malpass north of the industry median. In addition, Mark Malpass also owns shares of Steel & Tube Holdings valued at NZ $ 331,000 directly under their own name.
|Making up||2021||2020||Proportion (2021)|
|Salary||721,000 NZD||NZ $ 703,000||73%|
|Total compensation||994,000 NZD||NZ $ 703,000||100%|
At the industry level, almost 69% of total compensation is salary, while the remainder 31% is other compensation. Steel & Tube Holdings largely reflects the industry average in terms of the share of a salary in total compensation. If the total compensation is oriented towards the salary, this suggests that the variable part – which is generally linked to performance, is lower.
Growth of Steel & Tube Holdings Limited
Steel & Tube Holdings Limited has seen its earnings per share (EPS) increase by 35% per year over the past three years. Its turnover is up 15% compared to last year.
Shareholders would be happy to know that the company has improved over the past few years. It’s really positive to see this kind of revenue growth in just one year. It suggests a healthy and growing business. Stepping away from the current shape for a second, it might be important to check out this free visual representation of what analysts expect for the future.
Has Steel & Tube Holdings Limited been a good investment?
Considering the total shareholder loss of 9.7% over three years, many shareholders of Steel & Tube Holdings Limited are probably rather dissatisfied, to say the least. This suggests that it would be unwise for the company to pay the CEO too generously.
The fact that shareholders have been sitting on a loss in the value of their shares over the past few years is certainly disconcerting. The stock movement is disjointed with the company’s profit growth, which should ideally move in the same direction. Shareholders would be keen to know what is holding back the stock when earnings have risen. At the next AGM, shareholders will have the opportunity to discuss any issues with the board, including those related to CEO compensation and assess whether the board’s plan is likely to improve performance at the future.
CEO compensation can have a huge impact on performance, but it’s only one element. We have identified 1 warning sign for Steel & Tube Holdings which investors should be aware of in a dynamic business environment.
Sure, you might find a fantastic investment by looking at another set of stocks. So take a look at this free list of interesting companies.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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