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Is Harvey Norman Holdings Limited (ASX:HVN) Overpaying Its CEO?

Katie Page became the CEO of Harvey Norman Holdings Limited (ASX:HVN) in 1999. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Harvey Norman Holdings

How Does Katie Page's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Harvey Norman Holdings Limited has a market cap of AU$5.5b, and reported total annual CEO compensation of AU$3.0m for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$2.1m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$2.9b to AU$9.3b. The median total CEO compensation was AU$3.2m.

That means Katie Page receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see a visual representation of the CEO compensation at Harvey Norman Holdings, below.

ASX:HVN CEO Compensation, January 22nd 2020
ASX:HVN CEO Compensation, January 22nd 2020

Is Harvey Norman Holdings Limited Growing?

On average over the last three years, Harvey Norman Holdings Limited has shrunk earnings per share by 1.5% each year (measured with a line of best fit). Its revenue is up 12% over last year.

The lack of earnings per share growth in the last three years is unimpressive. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Harvey Norman Holdings Limited Been A Good Investment?

Harvey Norman Holdings Limited has served shareholders reasonably well, with a total return of 15% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Katie Page is paid around the same as most CEOs of similar size companies.

The company isn't growing earnings per share, and nor have the total returns inspired us. We wouldn't say the CEO pay is too high, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. Whatever your view on compensation, you might want to check if insiders are buying or selling Harvey Norman Holdings shares (free trial).

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.