Here's Why Shareholders Should Examine Standard Bank Group Limited's (JSE:SBK) CEO Compensation Package More Closely

The results at Standard Bank Group Limited (JSE:SBK) have been quite disappointing recently and CEO Sim Tshabalala bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Standard Bank Group

How Does Total Compensation For Sim Tshabalala Compare With Other Companies In The Industry?

At the time of writing, our data shows that Standard Bank Group Limited has a market capitalization of R192b, and reported total annual CEO compensation of R24m for the year to December 2020. That's a notable decrease of 51% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at R9.4m.

In comparison with other companies in the industry with market capitalizations over R112b , the reported median total CEO compensation was R33m. From this we gather that Sim Tshabalala is paid around the median for CEOs in the industry. Moreover, Sim Tshabalala also holds R67m worth of Standard Bank Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	R9.4m	R8.8m	39%
Other	R15m	R40m	61%
Total Compensation	R24m	R49m	100%

Talking in terms of the industry, salary represented approximately 26% of total compensation out of all the companies we analyzed, while other remuneration made up 74% of the pie. Standard Bank Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Standard Bank Group Limited's Growth

Over the last three years, Standard Bank Group Limited has shrunk its earnings per share by 22% per year. It saw its revenue drop 10% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Standard Bank Group Limited Been A Good Investment?

The return of -30% over three years would not have pleased Standard Bank Group Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

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 Standard Bank Group that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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. 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.
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