We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Adcorp Holdings Limited's (JSE:ADR) CEO For Now

Key Insights

• Adcorp Holdings' Annual General Meeting to take place on 30th of July
• Total pay for CEO John Wentzel includes R5.55m salary
• Total compensation is 86% above industry average
• Adcorp Holdings' three-year loss to shareholders was 1.7% while its EPS grew by 231% over the past three years

In the past three years, shareholders of Adcorp Holdings Limited (JSE:ADR) 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. The AGM coming up on the 30th of July could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Adcorp Holdings

Comparing Adcorp Holdings Limited's CEO Compensation With The Industry

Our data indicates that Adcorp Holdings Limited has a market capitalization of R517m, and total annual CEO compensation was reported as R9.6m for the year to February 2024. That's a slight decrease of 6.4% on the prior year. In particular, the salary of R5.55m, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the South Africa Professional Services industry with market capitalizations below R3.7b, we found that the median total CEO compensation was R5.2m. Hence, we can conclude that John Wentzel is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	R5.6m	R5.1m	58%
Other	R4.1m	R5.2m	42%
Total Compensation	R9.6m	R10m	100%

Speaking on an industry level, nearly 57% of total compensation represents salary, while the remainder of 43% is other remuneration. Adcorp Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 Adcorp Holdings Limited's Growth Numbers

Adcorp Holdings Limited's earnings per share (EPS) grew 231% per year over the last three years. In the last year, its revenue is up 7.7%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Adcorp Holdings Limited Been A Good Investment?

Given the total shareholder loss of 1.7% over three years, many shareholders in Adcorp Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 5 warning signs for Adcorp 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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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