We Discuss Why Novus Holdings Limited's (JSE:NVS) CEO Compensation May Be Closely Reviewed

Novus Holdings Limited (JSE:NVS) has not performed well recently and CEO Neil Birch will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 27 August 2021. 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 Novus Holdings

How Does Total Compensation For Neil Birch Compare With Other Companies In The Industry?

Our data indicates that Novus Holdings Limited has a market capitalization of R728m, and total annual CEO compensation was reported as R5.1m for the year to March 2021. Notably, that's an increase of 23% over the year before. Notably, the salary which is R3.83m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below R3.1b, reported a median total CEO compensation of R3.0m. Hence, we can conclude that Neil Birch is remunerated higher than the industry median. Moreover, Neil Birch also holds R12m worth of Novus Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	R3.8m	R3.8m	75%
Other	R1.3m	R331k	25%
Total Compensation	R5.1m	R4.2m	100%

Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. Novus Holdings pays out 75% of remuneration in the form of a salary, significantly higher than the industry average. 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 83% per year. It saw its revenue drop 31% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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?

Given the total shareholder loss of 22% over three years, many shareholders in Novus 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...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Novus Holdings (1 shouldn't be ignored!) that you should be aware of before investing here.

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.
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