It's Unlikely That Insimbi Industrial Holdings Limited's (JSE:ISB) CEO Will See A Huge Pay Rise This Year

Key Insights

• Insimbi Industrial Holdings will host its Annual General Meeting on 8th of July
• Salary of R3.90m is part of CEO Fred Botha's total remuneration
• Total compensation is 323% above industry average
• Insimbi Industrial Holdings' EPS grew by 3.6% over the past three years while total shareholder loss over the past three years was 3.8%

In the past three years, shareholders of Insimbi Industrial Holdings Limited (JSE:ISB) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 8th of July. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Insimbi Industrial Holdings

Comparing Insimbi Industrial Holdings Limited's CEO Compensation With The Industry

According to our data, Insimbi Industrial Holdings Limited has a market capitalization of R287m, and paid its CEO total annual compensation worth R6.5m over the year to February 2024. We note that's a decrease of 33% compared to last year. We note that the salary portion, which stands at R3.90m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the South Africa Trade Distributors industry with market capitalizations below R3.6b, we found that the median total CEO compensation was R1.5m. This suggests that Fred Botha is paid more than the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	R3.9m	R3.7m	60%
Other	R2.6m	R6.0m	40%
Total Compensation	R6.5m	R9.7m	100%

On an industry level, around 47% of total compensation represents salary and 53% is other remuneration. Insimbi Industrial Holdings pays out 60% of remuneration in the form of a salary, significantly higher than the industry average. 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.

Insimbi Industrial Holdings Limited's Growth

Insimbi Industrial Holdings Limited has seen its earnings per share (EPS) increase by 3.6% a year over the past three years. In the last year, its revenue is down 2.5%.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Insimbi Industrial Holdings Limited Been A Good Investment?

Since shareholders would have lost about 3.8% over three years, some Insimbi Industrial Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line 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 4 warning signs for Insimbi Industrial Holdings you should be aware of, and 2 of them are potentially serious.

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

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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.

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