Increases to Nu-World Holdings Limited's (JSE:NWL) CEO Compensation Might Cool off for now

Key Insights

• Nu-World Holdings to hold its Annual General Meeting on 08 February 2023
• CEO Jeffrey Goldberg's total compensation includes salary of R5.57m
• Total compensation is 87% above industry average
• Nu-World Holdings' EPS grew by -20% over the past three years while total shareholder return over the past three years was 17%

Despite positive share price growth of 17% for Nu-World Holdings Limited (JSE:NWL) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 08 February 2023. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Nu-World Holdings

How Does Total Compensation For Jeffrey Goldberg Compare With Other Companies In The Industry?

At the time of writing, our data shows that Nu-World Holdings Limited has a market capitalization of R570m, and reported total annual CEO compensation of R6.3m for the year to August 2022. This was the same amount the CEO received in the prior year. We note that the salary portion, which stands at R5.57m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the South Africa Consumer Durables industry with market capitalizations below R3.4b, reported a median total CEO compensation of R3.4m. Hence, we can conclude that Jeffrey Goldberg is remunerated higher than the industry median. Furthermore, Jeffrey Goldberg directly owns R30m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	R5.6m	R5.6m	89%
Other	R717k	R717k	11%
Total Compensation	R6.3m	R6.3m	100%

Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. Nu-World Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Nu-World Holdings Limited's Growth Numbers

Over the last three years, Nu-World Holdings Limited has shrunk its earnings per share by 20% per year. Its revenue is down 8.8% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Nu-World Holdings Limited Been A Good Investment?

With a total shareholder return of 17% over three years, Nu-World Holdings Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 6 warning signs for Nu-World Holdings you should be aware of, and 2 of them are significant.

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.