We Think The Compensation For Sasfin Holdings Limited's (JSE:SFN) CEO Looks About Right

The performance at Sasfin Holdings Limited (JSE:SFN) has been rather lacklustre of late and shareholders may be wondering what CEO Michael E. Sassoon is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 28 November 2022. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

Our analysis indicates that SFN is potentially undervalued!

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 R769m, and total annual CEO compensation was reported as R6.1m for the year to June 2022. Notably, that's an increase of 29% over the year before. In particular, the salary of R3.84m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under R3.5b, the reported median total CEO compensation was R10m. This suggests that Michael E. Sassoon is paid below the industry median.

Component	2022	2021	Proportion (2022)
Salary	R3.8m	R3.7m	63%
Other	R2.3m	R1.0m	37%
Total Compensation	R6.1m	R4.7m	100%

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. It's interesting to note that Sasfin Holdings pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Sasfin Holdings Limited's Growth Numbers

Over the past three years, Sasfin Holdings Limited has seen its earnings per share (EPS) grow by 9.1% per year. Its revenue is up 15% over the last year.

We think the revenue growth is good. And the modest growth in EPS isn't bad, either. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sasfin Holdings Limited Been A Good Investment?

Given the total shareholder loss of 7.6% over three years, many shareholders in Sasfin Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

It may not be surprising to some that the recent weak performance in the share price may be driven in part by rather flat EPS growth. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their 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 5 warning signs for Sasfin Holdings you should be aware of, and 2 of them make us uncomfortable.

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. 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.