This Is Why Spark New Zealand Limited's (NZSE:SPK) CEO Can Expect A Bump Up In Their Pay Packet

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

Thu, Oct 26, 2023, 9:57 PM 4 min read

Spark New Zealand to hold its Annual General Meeting on 2nd of November
Total pay for CEO Jolie Hodson includes NZ$1.27m salary
The total compensation is 32% less than the average for the industry
Spark New Zealand's EPS grew by 39% over the past three years while total shareholder return over the past three years was 30%

Shareholders will be pleased by the robust performance of Spark New Zealand Limited (NZSE:SPK) recently and this will be kept in mind in the upcoming AGM on 2nd of November. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

See our latest analysis for Spark New Zealand

Comparing Spark New Zealand Limited's CEO Compensation With The Industry

Our data indicates that Spark New Zealand Limited has a market capitalization of NZ$9.0b, and total annual CEO compensation was reported as NZ$2.7m for the year to June 2023. That's a notable decrease of 13% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at NZ$1.3m.

On examining similar-sized companies in the New Zealand Telecom industry with market capitalizations between NZ$6.9b and NZ$21b, we discovered that the median CEO total compensation of that group was NZ$4.0m. Accordingly, Spark New Zealand pays its CEO under the industry median. What's more, Jolie Hodson holds NZ$1.5m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	NZ$1.3m	NZ$1.2m	47%
Other	NZ$1.5m	NZ$1.9m	53%
Total Compensation	NZ$2.7m	NZ$3.1m	100%

On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. There isn't a significant difference between Spark New Zealand and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation — NZSE:SPK CEO Compensation October 27th 2023

A Look at Spark New Zealand Limited's Growth Numbers

Spark New Zealand Limited has seen its earnings per share (EPS) increase by 39% a year over the past three years. It achieved revenue growth of 21% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Spark New Zealand Limited Been A Good Investment?

Spark New Zealand Limited has generated a total shareholder return of 30% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

The company's overall performance, while not bad, could be better. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Spark New Zealand you should be aware of, and 2 of them are a bit concerning.

Important note: Spark New Zealand 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.