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Purple Group Limited's (JSE:PPE) CEO Compensation Is Looking A Bit Stretched At The Moment
Key Insights
- Purple Group will host its Annual General Meeting on 24th of January
- CEO Charles Savage's total compensation includes salary of R5.13m
- The total compensation is 58% higher than the average for the industry
- Purple Group's three-year loss to shareholders was 68% while its EPS was down 27% over the past three years
In the past three years, the share price of Purple Group Limited (JSE:PPE) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also lacking, despite revenue growth. The AGM coming up on 24th of January will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.
View our latest analysis for Purple Group
How Does Total Compensation For Charles Savage Compare With Other Companies In The Industry?
According to our data, Purple Group Limited has a market capitalization of R1.5b, and paid its CEO total annual compensation worth R5.6m over the year to August 2024. That's a notable decrease of 14% on last year. Notably, the salary which is R5.13m, represents most of the total compensation being paid.
For comparison, other companies in the South Africa Capital Markets industry with market capitalizations below R3.8b, reported a median total CEO compensation of R3.5m. Accordingly, our analysis reveals that Purple Group Limited pays Charles Savage north of the industry median. Furthermore, Charles Savage directly owns R45m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2024 | 2023 | Proportion (2024) |
Salary | R5.1m | R5.2m | 93% |
Other | R416k | R1.3m | 7% |
Total Compensation | R5.6m | R6.5m | 100% |
Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. It's interesting to note that Purple Group pays out a greater portion of remuneration through salary, compared to the industry. 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.
Purple Group Limited's Growth
Purple Group Limited has reduced its earnings per share by 27% a year over the last three years. Its revenue is up 44% over the last year.
The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Purple Group Limited Been A Good Investment?
The return of -68% over three years would not have pleased Purple Group Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. Shareholders will get the chance at the upcoming AGM 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.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Purple Group that you should be aware of before investing.
Switching gears from Purple Group, 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.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
About JSE:PPE
Purple Group
A financial services and technology company, engages in trading platforms, fractional property and crypto asset investing, retirement fund administration, and asset management businesses in South Africa.
Excellent balance sheet with acceptable track record.