ARB Holdings Limited's (JSE:ARH) CEO Compensation Looks Acceptable To Us And Here's Why

Performance at ARB Holdings Limited (JSE:ARH) has been reasonably good and CEO Billy Neasham has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 15 November 2021. Here is our take on why we think the CEO compensation looks appropriate.

See our latest analysis for ARB Holdings

How Does Total Compensation For Billy Neasham Compare With Other Companies In The Industry?

Our data indicates that ARB Holdings Limited has a market capitalization of R1.5b, and total annual CEO compensation was reported as R3.9m for the year to June 2021. That's a modest increase of 3.9% on the prior year. Notably, the salary which is R3.32m, 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 R3.9m. This suggests that ARB Holdings remunerates its CEO largely in line with the industry average. Furthermore, Billy Neasham directly owns R32m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	R3.3m	R3.2m	85%
Other	R593k	R528k	15%
Total Compensation	R3.9m	R3.8m	100%

On an industry level, around 78% of total compensation represents salary and 22% is other remuneration. Although there is a difference in how total compensation is set, ARB Holdings more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at ARB Holdings Limited's Growth Numbers

ARB Holdings Limited has seen its earnings per share (EPS) increase by 4.3% a year over the past three years. It achieved revenue growth of 24% over the last year.

We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. Although we'll stop short of calling the stock a top performer, we think the company has potential. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has ARB Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with ARB Holdings Limited for providing a total return of 33% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which is a bit concerning) in ARB Holdings we think you should know about.

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.

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.

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