This Is Why Shareholders May Want To Hold Back On A Pay Rise For KAP Industrial Holdings Limited's (JSE:KAP) CEO

Simply Wall St
November 11, 2021
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The underwhelming performance at KAP Industrial Holdings Limited (JSE:KAP) recently has probably not pleased shareholders. At the upcoming AGM on 18 November 2021, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. The data we gathered below shows that CEO compensation looks acceptable for now.

See our latest analysis for KAP Industrial Holdings

Comparing KAP Industrial Holdings Limited's CEO Compensation With the industry

Our data indicates that KAP Industrial Holdings Limited has a market capitalization of R11b, and total annual CEO compensation was reported as R7.8m for the year to June 2021. We note that's a small decrease of 6.4% on last year. Notably, the salary which is R7.44m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from R6.1b to R24b, the reported median CEO total compensation was R15m. This suggests that Gary Chaplin is paid below the industry median. What's more, Gary Chaplin holds R13m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20212020Proportion (2021)
Salary R7.4m R7.1m 95%
Other R401k R1.3m 5%
Total CompensationR7.8m R8.4m100%

Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. It's interesting to note that KAP Industrial 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.

JSE:KAP CEO Compensation November 12th 2021

A Look at KAP Industrial Holdings Limited's Growth Numbers

Over the last three years, KAP Industrial Holdings Limited has shrunk its earnings per share by 9.4% per year. In the last year, its revenue is up 11%.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. 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 KAP Industrial Holdings Limited Been A Good Investment?

The return of -39% over three years would not have pleased KAP Industrial Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for KAP Industrial Holdings that investors should be aware of in a dynamic business environment.

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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