Shareholders Will Probably Hold Off On Increasing KAP Limited's (JSE:KAP) CEO Compensation For The Time Being

Key Insights

• KAP's Annual General Meeting to take place on 21st of November
• Total pay for CEO Gary Chaplin includes R10.2m salary
• The overall pay is 161% above the industry average
• KAP's EPS grew by 80% over the past three years while total shareholder return over the past three years was 9.6%

Performance at KAP Limited (JSE:KAP) has been reasonably good and CEO Gary Chaplin has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 21st of November. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for KAP

Comparing KAP Limited's CEO Compensation With The Industry

According to our data, KAP Limited has a market capitalization of R6.4b, and paid its CEO total annual compensation worth R31m over the year to June 2023. That's a notable increase of 21% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at R10m.

For comparison, other companies in the South Africa Industrials industry with market capitalizations ranging between R3.7b and R15b had a median total CEO compensation of R12m. This suggests that Gary Chaplin is paid more than the median for the industry. Moreover, Gary Chaplin also holds R11m worth of KAP stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 35% of total compensation represents salary, while the remainder of 65% is other remuneration. There isn't a significant difference between KAP and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at KAP Limited's Growth Numbers

KAP Limited has seen its earnings per share (EPS) increase by 80% a year over the past three years. Its revenue is up 5.9% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has KAP Limited Been A Good Investment?

With a total shareholder return of 9.6% over three years, KAP Limited has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for KAP (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from KAP, 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.