Shareholders Will Probably Hold Off On Increasing JSE Limited's (JSE:JSE) CEO Compensation For The Time Being

Key Insights

• JSE's Annual General Meeting to take place on 7th of May
• Total pay for CEO Leila Fourie includes R7.64m salary
• The total compensation is 50% higher than the average for the industry
• JSE's three-year loss to shareholders was 6.1% while its EPS grew by 1.1% over the past three years

As many shareholders of JSE Limited (JSE:JSE) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 7th of May. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for JSE

How Does Total Compensation For Leila Fourie Compare With Other Companies In The Industry?

Our data indicates that JSE Limited has a market capitalization of R7.3b, and total annual CEO compensation was reported as R22m for the year to December 2023. Notably, that's an increase of 18% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at R7.6m.

On comparing similar companies from the South Africa Capital Markets industry with market caps ranging from R3.8b to R15b, we found that the median CEO total compensation was R15m. This suggests that Leila Fourie is paid more than the median for the industry. Moreover, Leila Fourie also holds R29m worth of JSE stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	R7.6m	R7.1m	34%
Other	R15m	R12m	66%
Total Compensation	R22m	R19m	100%

Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. JSE sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at JSE Limited's Growth Numbers

Over the past three years, JSE Limited has seen its earnings per share (EPS) grow by 1.1% per year. Its revenue is up 6.1% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has JSE Limited Been A Good Investment?

With a three year total loss of 6.1% for the shareholders, JSE Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for JSE that investors should be aware of in a dynamic business environment.

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.