Most Shareholders Will Probably Find That The CEO Compensation For Primeserv Group Limited (JSE:PMV) Is Reasonable

By
Simply Wall St
Published
November 19, 2021
JSE:PMV
Source: Shutterstock

CEO Merrick Abel has done a decent job of delivering relatively good performance at Primeserv Group Limited (JSE:PMV) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 26 November 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

View our latest analysis for Primeserv Group

How Does Total Compensation For Merrick Abel Compare With Other Companies In The Industry?

At the time of writing, our data shows that Primeserv Group Limited has a market capitalization of R94m, and reported total annual CEO compensation of R5.4m for the year to March 2021. We note that's a decrease of 32% compared to last year. We note that the salary portion, which stands at R4.21m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below R3.1b, we found that the median total CEO compensation was R4.2m. So it looks like Primeserv Group compensates Merrick Abel in line with the median for the industry. Moreover, Merrick Abel also holds R24m worth of Primeserv Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary R4.2m R4.5m 79%
Other R1.1m R3.4m 21%
Total CompensationR5.4m R7.9m100%

Speaking on an industry level, nearly 52% of total compensation represents salary, while the remainder of 48% is other remuneration. According to our research, Primeserv Group has allocated a higher percentage of pay to salary in comparison to the wider 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.

ceo-compensation
JSE:PMV CEO Compensation November 20th 2021

A Look at Primeserv Group Limited's Growth Numbers

Over the past three years, Primeserv Group Limited has seen its earnings per share (EPS) grow by 5.2% per year. It achieved revenue growth of 6.8% over the last year.

We're not particularly impressed by the revenue growth, but we're happy with the modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Primeserv Group Limited Been A Good Investment?

We think that the total shareholder return of 115%, over three years, would leave most Primeserv Group Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Primeserv Group you should be aware of, and 1 of them is potentially serious.

Important note: Primeserv Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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