A Quick Analysis On Purple Group's (JSE:PPE) CEO Compensation

This article will reflect on the compensation paid to Charles Savage who has served as CEO of Purple Group Limited (JSE:PPE) since 2007. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Purple Group.

View our latest analysis for Purple Group

Comparing Purple Group Limited's CEO Compensation With the industry

Our data indicates that Purple Group Limited has a market capitalization of R817m, and total annual CEO compensation was reported as R5.4m for the year to August 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is R4.40m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under R3.1b, the reported median total CEO compensation was R5.4m. This suggests that Purple Group remunerates its CEO largely in line with the industry average. Moreover, Charles Savage also holds R17m worth of Purple Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 54% of total compensation represents salary and 46% is other remuneration. It's interesting to note that Purple Group pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Purple Group Limited's Growth Numbers

Purple Group Limited's earnings per share (EPS) grew 93% per year over the last three years. In the last year, its revenue is up 65%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Purple Group Limited Been A Good Investment?

Most shareholders would probably be pleased with Purple Group Limited for providing a total return of 183% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

As we touched on above, Purple Group Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Indeed, many might consider that Charles is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Purple Group that you should be aware of before investing.

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. 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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