Shareholders May Be Wary Of Increasing Balwin Properties Limited's (JSE:BWN) CEO Compensation Package

Key Insights

• Balwin Properties' Annual General Meeting to take place on 21st of August
• Total pay for CEO Steve Brookes includes R6.56m salary
• The total compensation is 257% higher than the average for the industry
• Over the past three years, Balwin Properties' EPS fell by 14% and over the past three years, the total loss to shareholders 44%

Shareholders will probably not be too impressed with the underwhelming results at Balwin Properties Limited (JSE:BWN) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 21st of August. 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 Balwin Properties

Comparing Balwin Properties Limited's CEO Compensation With The Industry

According to our data, Balwin Properties Limited has a market capitalization of R865m, and paid its CEO total annual compensation worth R12m over the year to February 2024. We note that's a decrease of 27% compared to last year. Notably, the salary which is R6.56m, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the South Africa Consumer Durables industry with market capitalizations below R3.6b, reported a median total CEO compensation of R3.3m. Accordingly, our analysis reveals that Balwin Properties Limited pays Steve Brookes north of the industry median. What's more, Steve Brookes holds R318m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	R6.6m	R6.2m	56%
Other	R5.2m	R9.9m	44%
Total Compensation	R12m	R16m	100%

On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. Our data reveals that Balwin Properties allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Balwin Properties Limited's Growth Numbers

Over the last three years, Balwin Properties Limited has shrunk its earnings per share by 14% per year. Its revenue is down 29% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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 Balwin Properties Limited Been A Good Investment?

The return of -44% over three years would not have pleased Balwin Properties Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 6 warning signs for Balwin Properties you should be aware of, and 2 of them are concerning.

Important note: Balwin Properties 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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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.