We Think The Compensation For Remgro Limited's (JSE:REM) CEO Looks About Right

Key Insights

• Remgro to hold its Annual General Meeting on 28th of November
• Salary of R13.6m is part of CEO Jannie Durand's total remuneration
• The total compensation is 59% less than the average for the industry
• Over the past three years, Remgro's EPS fell by 38% and over the past three years, the total shareholder return was 24%

Shareholders may be wondering what CEO Jannie Durand plans to do to improve the less than great performance at Remgro Limited (JSE:REM) recently. At the next AGM coming up on 28th of November, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Remgro

How Does Total Compensation For Jannie Durand Compare With Other Companies In The Industry?

At the time of writing, our data shows that Remgro Limited has a market capitalization of R83b, and reported total annual CEO compensation of R17m for the year to June 2024. That's just a smallish increase of 6.3% on last year. We note that the salary portion, which stands at R13.6m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the South Africa Diversified Financial industry with market capitalizations ranging between R36b and R116b had a median total CEO compensation of R42m. That is to say, Jannie Durand is paid under the industry median. What's more, Jannie Durand holds R146m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	R14m	R13m	79%
Other	R3.7m	R3.5m	21%
Total Compensation	R17m	R16m	100%

Speaking on an industry level, nearly 26% of total compensation represents salary, while the remainder of 74% is other remuneration. It's interesting to note that Remgro pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Remgro Limited's Growth Numbers

Over the last three years, Remgro Limited has shrunk its earnings per share by 38% per year. It achieved revenue growth of 4.7% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Remgro Limited Been A Good Investment?

Remgro Limited has served shareholders reasonably well, with a total return of 24% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Remgro 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. 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.