What We Learned About Trematon Capital Investments' (JSE:TMT) CEO Compensation

Arnold Shapiro has been the CEO of Trematon Capital Investments Limited (JSE:TMT) since 2005, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Trematon Capital Investments pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Trematon Capital Investments

How Does Total Compensation For Arnold Shapiro Compare With Other Companies In The Industry?

Our data indicates that Trematon Capital Investments Limited has a market capitalization of R475m, and total annual CEO compensation was reported as R4.1m for the year to August 2020. That's a notable decrease of 25% on last year. Notably, the salary which is R2.97m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below R3.0b, we found that the median total CEO compensation was R5.3m. So it looks like Trematon Capital Investments compensates Arnold Shapiro in line with the median for the industry. Furthermore, Arnold Shapiro directly owns R3.2m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Trematon Capital Investments pays out 72% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Trematon Capital Investments Limited's Growth

Over the last three years, Trematon Capital Investments Limited has shrunk its earnings per share by 109% per year. It saw its revenue drop 2.9% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Trematon Capital Investments Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Trematon Capital Investments Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Arnold is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Trematon Capital Investments (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Trematon Capital Investments is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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