Here's Why Shareholders May Want To Be Cautious With Increasing Experience Co Limited's (ASX:EXP) CEO Pay Packet

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

Thu, Oct 26, 2023, 7:02 PM 4 min read

Experience Co's Annual General Meeting to take place on 2nd of November
CEO John O’Sullivan's total compensation includes salary of AU$539.8k
The overall pay is 78% above the industry average
Over the past three years, Experience Co's EPS grew by 79% and over the past three years, the total loss to shareholders 9.1%

In the past three years, the share price of Experience Co Limited (ASX:EXP) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 2nd of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Experience Co

Comparing Experience Co Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Experience Co Limited has a market capitalization of AU$155m, and reported total annual CEO compensation of AU$1.2m for the year to June 2023. Notably, that's an increase of 20% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$540k.

For comparison, other companies in the Australian Hospitality industry with market capitalizations below AU$317m, reported a median total CEO compensation of AU$691k. Hence, we can conclude that John O’Sullivan is remunerated higher than the industry median. Moreover, John O’Sullivan also holds AU$681k worth of Experience Co stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$540k	AU$514k	44%
Other	AU$694k	AU$511k	56%
Total Compensation	AU$1.2m	AU$1.0m	100%

On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. It's interesting to note that Experience Co allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation — ASX:EXP CEO Compensation October 27th 2023

A Look at Experience Co Limited's Growth Numbers

Over the past three years, Experience Co Limited has seen its earnings per share (EPS) grow by 79% per year. In the last year, its revenue is up 95%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Experience Co Limited Been A Good Investment?

Given the total shareholder loss of 9.1% over three years, many shareholders in Experience Co Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Experience Co that investors should look into moving forward.

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. 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.