In 2007 Charles Savage was appointed CEO of Purple Group Limited (JSE:PPE). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Purple Group
How Does Charles Savage's Compensation Compare With Similar Sized Companies?
Our data indicates that Purple Group Limited is worth R376m, and total annual CEO compensation was reported as R5.3m for the year to August 2019. We note that's an increase of 8.0% above last year. While we always look at total compensation first, we note that the salary component is less, at R4.2m. We examined a group of similar sized companies, with market capitalizations of below R2.9b. The median CEO total compensation in that group is R4.7m.
That means Charles Savage receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see, below, how CEO compensation at Purple Group has changed over time.
Is Purple Group Limited Growing?
Over the last three years Purple Group Limited has grown its earnings per share (EPS) by an average of 33% per year (using a line of best fit). Its revenue is up 40% over last year.
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 earnings per share improvement certainly points to the kind of growth I like to see. Although we don't have analyst forecasts 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?
With a three year total loss of 22%, Purple Group Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Charles Savage is paid around what is normal the leaders of comparable size companies.
We like that the company is growing EPS, but we cannot say the same about the lacklustre shareholder returns (over the last three years). Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. So you may want to check if insiders are buying Purple Group shares with their own money (free access).
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.