Shareholders Will Probably Hold Off On Increasing Murray & Roberts Holdings Limited's (JSE:MUR) CEO Compensation For The Time Being

Key Insights

• Murray & Roberts Holdings' Annual General Meeting to take place on 2nd of November
• Salary of R8.34m is part of CEO Henry Laas's total remuneration
• The total compensation is 294% higher than the average for the industry
• Over the past three years, Murray & Roberts Holdings' EPS grew by 71% and over the past three years, the total loss to shareholders 91%

Shareholders of Murray & Roberts Holdings Limited (JSE:MUR) will have been dismayed by the negative share price return over the last three years. 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 2nd of November. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Murray & Roberts Holdings

Comparing Murray & Roberts Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Murray & Roberts Holdings Limited has a market capitalization of R282m, and reported total annual CEO compensation of R14m for the year to June 2023. Notably, that's a decrease of 25% over the year before. We note that the salary of R8.34m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the South Africa Construction industry with market capitalizations below R3.8b, we found that the median total CEO compensation was R3.6m. Hence, we can conclude that Henry Laas is remunerated higher than the industry median. Moreover, Henry Laas also holds R3.0m worth of Murray & Roberts Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	R8.3m	R7.9m	59%
Other	R5.9m	R11m	41%
Total Compensation	R14m	R19m	100%

On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. Murray & Roberts Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Murray & Roberts Holdings Limited's Growth Numbers

Over the past three years, Murray & Roberts Holdings Limited has seen its earnings per share (EPS) grow by 71% per year. In the last year, its revenue is up 42%.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Murray & Roberts Holdings Limited Been A Good Investment?

With a total shareholder return of -91% over three years, Murray & Roberts Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Murray & Roberts Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

Switching gears from Murray & Roberts 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.

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

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.