We Think Shareholders May Want To Consider A Review Of KAP Limited's (JSE:KAP) CEO Compensation Package

Key Insights

• KAP to hold its Annual General Meeting on 29th of November
• Total pay for CEO Gary Chaplin includes R10.2m salary
• Total compensation is 241% above industry average
• KAP's three-year loss to shareholders was 21% while its EPS was down 0.2% over the past three years

The results at KAP Limited (JSE:KAP) have been quite disappointing recently and CEO Gary Chaplin bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 29th of November. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for KAP

How Does Total Compensation For Gary Chaplin Compare With Other Companies In The Industry?

At the time of writing, our data shows that KAP Limited has a market capitalization of R8.0b, and reported total annual CEO compensation of R27m for the year to June 2024. We note that's a decrease of 24% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at R10m.

In comparison with other companies in the South Africa Industrials industry with market capitalizations ranging from R3.6b to R14b, the reported median CEO total compensation was R8.1m. Accordingly, our analysis reveals that KAP Limited pays Gary Chaplin north of the industry median. Furthermore, Gary Chaplin directly owns R13m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	R10m	R10m	37%
Other	R17m	R26m	63%
Total Compensation	R27m	R36m	100%

On an industry level, around 37% of total compensation represents salary and 63% is other remuneration. Although there is a difference in how total compensation is set, KAP more or less reflects the market in terms of setting the salary. 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

Over the last three years, KAP Limited has not seen its earnings per share change much, though they have deteriorated slightly. It saw its revenue drop 1.9% over the last year.

The lack of EPS growth is certainly uninspiring. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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?

Since shareholders would have lost about 21% over three years, some KAP Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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.

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 2 warning signs for KAP you should be aware of, and 1 of them makes us a bit uncomfortable.

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.