Does Renergen's (JSE:REN) CEO Salary Compare Well With Industry Peers?

Stefano Marani has been the CEO of Renergen Limited (JSE:REN) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Renergen pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Renergen

How Does Total Compensation For Stefano Marani Compare With Other Companies In The Industry?

At the time of writing, our data shows that Renergen Limited has a market capitalization of R1.5b, and reported total annual CEO compensation of R4.7m for the year to February 2020. We note that's an increase of 44% above last year. In particular, the salary of R3.68m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under R2.9b, the reported median total CEO compensation was R4.6m. From this we gather that Stefano Marani is paid around the median for CEOs in the industry. What's more, Stefano Marani holds R3.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. Our data reveals that Renergen allocates salary more or less in line with the wider market. 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.

Renergen Limited's Growth

Over the last three years, Renergen Limited has shrunk its earnings per share by 5.5% per year. It saw its revenue drop 21% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Renergen Limited Been A Good Investment?

Renergen Limited has served shareholders reasonably well, with a total return of 27% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As previously discussed, Stefano is compensated close to the median for companies of its size, and which belong to the same industry. According to our analysis, Renergen is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. This doesn't compare well with CEO compensation, which is largely in line with the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Renergen (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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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