We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Steinhoff International Holdings N.V.'s (JSE:SNH) CEO For Now

Despite strong share price growth of 96% for Steinhoff International Holdings N.V. (JSE:SNH) 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 25 March 2022. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. 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.

Check out our latest analysis for Steinhoff International Holdings

How Does Total Compensation For Louis du Preez Compare With Other Companies In The Industry?

Our data indicates that Steinhoff International Holdings N.V. has a market capitalization of R15b, and total annual CEO compensation was reported as €3.9m for the year to September 2021. We note that's an increase of 12% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €1.3m.

On examining similar-sized companies in the industry with market capitalizations between R6.0b and R24b, we discovered that the median CEO total compensation of that group was €942k. Accordingly, our analysis reveals that Steinhoff International Holdings N.V. pays Louis du Preez north of the industry median.

Component	2021	2020	Proportion (2021)
Salary	€1.3m	€1.3m	34%
Other	€2.6m	€2.1m	66%
Total Compensation	€3.9m	€3.4m	100%

On an industry level, roughly 55% of total compensation represents salary and 45% is other remuneration. Steinhoff International Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Steinhoff International Holdings N.V.'s Growth Numbers

Steinhoff International Holdings N.V. has reduced its earnings per share by 28% a year over the last three years. It achieved revenue growth of 14% over the last year.

The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. 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 Steinhoff International Holdings N.V. Been A Good Investment?

We think that the total shareholder return of 96%, over three years, would leave most Steinhoff International Holdings N.V. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Steinhoff International Holdings you should be aware of, and 2 of them are a bit concerning.

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.