Key Insights

Tower's Annual General Meeting to take place on 27th of February Total pay for CEO Blair Turnbull includes NZ$650.0k salary The overall pay is 34% above the industry average Over the past three years, Tower's EPS fell by 0.6%  and over the past three years, the total loss to shareholders 4.1%

Shareholders will probably not be too impressed with the underwhelming results at Tower Limited (NZSE:TWR) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27th of February. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Tower

Comparing Tower Limited's CEO Compensation With The Industry

Our data indicates that Tower Limited has a market capitalization of NZ$228m, and total annual CEO compensation was reported as NZ$650k for the year to September 2022. This was the same as last year. Notably, the salary of NZ$650k is the entirety of the CEO compensation.

For comparison, other companies in the New Zealand Insurance industry with market capitalizations below NZ$320m, reported a median total CEO compensation of NZ$485k. Hence, we can conclude that Blair Turnbull is remunerated higher than the industry median. What's more, Blair Turnbull holds NZ$153k worth of shares in the company in their own name.

Component 2022 2021 Proportion (2022) Salary NZ$650k NZ$650k 100% Other - - - Total Compensation NZ$650k NZ$650k 100%

Speaking on an industry level, nearly 39% of total compensation represents salary, while the remainder of 61% is other remuneration. Speaking on a company level, Tower prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

 ceo-compensation

A Look at Tower Limited's Growth Numbers

Earnings per share at Tower Limited are much the same as they were three years ago, albeit slightly lower. In the last year, its revenue is up 7.3%.

Its a bit disappointing to see that the company has failed to grow its EPS. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Tower Limited Been A Good Investment?

With a three year total loss of 4.1% for the shareholders, Tower Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Tower pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Tower that investors should look into moving forward.

Switching gears from Tower, if you're hunting for a pristine balance sheet and premium returns, this freelist of high return, low debt companies is a great place to look.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here