Our View On Sasfin Holdings' (JSE:SFN) CEO Pay

This article will reflect on the compensation paid to Michael E. Sassoon who has served as CEO of Sasfin Holdings Limited (JSE:SFN) since 2018. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Sasfin Holdings.

View our latest analysis for Sasfin Holdings

How Does Total Compensation For Michael E. Sassoon Compare With Other Companies In The Industry?

Our data indicates that Sasfin Holdings Limited has a market capitalization of R706m, and total annual CEO compensation was reported as R5.2m for the year to June 2020. We note that's an increase of 12% above last year. Notably, the salary which is R3.64m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below R3.0b, reported a median total CEO compensation of R5.2m. From this we gather that Michael E. Sassoon is paid around the median for CEOs in the industry.

On an industry level, around 21% of total compensation represents salary and 79% is other remuneration. According to our research, Sasfin Holdings has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Sasfin Holdings Limited's Growth

Over the last three years, Sasfin Holdings Limited has shrunk its earnings per share by 30% per year. Its revenue is down 22% over the previous 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Sasfin Holdings Limited Been A Good Investment?

With a three year total loss of 45% for the shareholders, Sasfin Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Sasfin Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Sasfin Holdings you should be aware of, and 1 of them is significant.

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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