Here's What We Learned About The CEO Pay At Novus Holdings Limited (JSE:NVS)

Neil Birch became the CEO of Novus Holdings Limited (JSE:NVS) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Novus Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Novus Holdings

Comparing Novus Holdings Limited's CEO Compensation With the industry

Our data indicates that Novus Holdings Limited has a market capitalization of R300m, and total annual CEO compensation was reported as R4.2m for the year to March 2020. Notably, that's a decrease of 14% over the year before. In particular, the salary of R3.83m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below R3.1b, reported a median total CEO compensation of R3.4m. This suggests that Novus Holdings remunerates its CEO largely in line with the industry average. What's more, Neil Birch holds R4.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. Novus Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Novus Holdings Limited's Growth

Over the last three years, Novus Holdings Limited has shrunk its earnings per share by 109% per year. It saw its revenue drop 20% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Novus Holdings Limited Been A Good Investment?

With a three year total loss of 82% for the shareholders, Novus Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Novus Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

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 3 warning signs for Novus Holdings (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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. 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.
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