Here's Why Shareholders May Want To Be Cautious With Increasing Deneb Investments Limited's (JSE:DNB) CEO Pay Packet

As many shareholders of Deneb Investments Limited (JSE:DNB) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 13 October 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Deneb Investments

Comparing Deneb Investments Limited's CEO Compensation With the industry

According to our data, Deneb Investments Limited has a market capitalization of R801m, and paid its CEO total annual compensation worth R8.9m over the year to March 2021. Notably, that's an increase of 17% over the year before. In particular, the salary of R4.73m, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under R3.0b, the reported median total CEO compensation was R479k. Accordingly, our analysis reveals that Deneb Investments Limited pays Stuart Queen north of the industry median. What's more, Stuart Queen holds R7.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	R4.7m	R4.7m	53%
Other	R4.1m	R2.9m	47%
Total Compensation	R8.9m	R7.6m	100%

On an industry level, around 56% of total compensation represents salary and 44% is other remuneration. Although there is a difference in how total compensation is set, Deneb Investments more or less reflects the market in terms of setting the salary. 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.

Deneb Investments Limited's Growth

Deneb Investments Limited's earnings per share (EPS) grew 3.3% per year over the last three years. In the last year, its revenue is down 9.3%.

We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Deneb Investments Limited Been A Good Investment?

With a three year total loss of 7.0% for the shareholders, Deneb Investments Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 6 warning signs for Deneb Investments you should be aware of, and 2 of them can't be ignored.

Switching gears from Deneb 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.

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.

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