This Is The Reason Why We Think African Equity Empowerment Investments Limited's (JSE:AEE) CEO Deserves A Bump Up To Their Compensation

Key Insights

• African Equity Empowerment Investments' Annual General Meeting to take place on 27th of February
• Total pay for CEO Valentine Dzvova includes R2.18m salary
• Total compensation is 51% below industry average
• Over the past three years, African Equity Empowerment Investments' EPS grew by 90% and over the past three years, the total shareholder return was 77%

Shareholders will be pleased by the impressive results for African Equity Empowerment Investments Limited (JSE:AEE) recently and CEO Valentine Dzvova has played a key role. At the upcoming AGM on 27th of February, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and probably deserves a well-earned pay rise.

See our latest analysis for African Equity Empowerment Investments

How Does Total Compensation For Valentine Dzvova Compare With Other Companies In The Industry?

At the time of writing, our data shows that African Equity Empowerment Investments Limited has a market capitalization of R422m, and reported total annual CEO compensation of R3.1m for the year to August 2022. We note that's an increase of 50% above last year. We note that the salary portion, which stands at R2.18m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the South Africa Capital Markets industry with market capitalizations below R3.6b, we found that the median total CEO compensation was R6.3m. Accordingly, African Equity Empowerment Investments pays its CEO under the industry median.

Component	2022	2021	Proportion (2022)
Salary	R2.2m	R1.7m	70%
Other	R923k	R347k	30%
Total Compensation	R3.1m	R2.1m	100%

On an industry level, roughly 39% of total compensation represents salary and 61% is other remuneration. According to our research, African Equity Empowerment Investments has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

African Equity Empowerment Investments Limited's Growth

Over the past three years, African Equity Empowerment Investments Limited has seen its earnings per share (EPS) grow by 90% per year. In the last year, its revenue changed by just 0.2%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has African Equity Empowerment Investments Limited Been A Good Investment?

Most shareholders would probably be pleased with African Equity Empowerment Investments Limited for providing a total return of 77% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. In saying that, some shareholders may feel that the more important issues to be addressed may be how the management plans to steer the company towards sustainable profitability in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for African Equity Empowerment Investments (2 can't be ignored!) that you should be aware of before investing here.

Switching gears from African Equity Empowerment Investments, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.