Shareholders Will Most Likely Find FirstRand Limited's (JSE:FSR) CEO Compensation Acceptable

CEO Alan Pullinger has done a decent job of delivering relatively good performance at FirstRand Limited (JSE:FSR) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 01 December 2022. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

Our analysis indicates that FSR is potentially overvalued!

How Does Total Compensation For Alan Pullinger Compare With Other Companies In The Industry?

According to our data, FirstRand Limited has a market capitalization of R372b, and paid its CEO total annual compensation worth R48m over the year to June 2022. That's just a smallish increase of 6.1% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at R9.1m.

On comparing similar companies in the industry with market capitalizations above R136b, we found that the median total CEO compensation was R48m. From this we gather that Alan Pullinger is paid around the median for CEOs in the industry. Furthermore, Alan Pullinger directly owns R401m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	R9.1m	R9.0m	19%
Other	R39m	R37m	81%
Total Compensation	R48m	R46m	100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. FirstRand 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.

FirstRand Limited's Growth

FirstRand Limited's earnings per share (EPS) grew 2.7% per year over the last three years. In the last year, its revenue is up 13%.

This revenue growth could really point to a brighter future. And, while modest, the EPS growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 FirstRand Limited Been A Good Investment?

FirstRand Limited has served shareholders reasonably well, with a total return of 25% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which is significant) in FirstRand we think you should know about.

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.