Shareholders May Find It Hard To Justify Increasing Oceana Group Limited's (JSE:OCE) CEO Compensation For Now

In the past three years, the share price of Oceana Group Limited (JSE:OCE) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 24 March 2021. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Oceana Group

Comparing Oceana Group Limited's CEO Compensation With the industry

At the time of writing, our data shows that Oceana Group Limited has a market capitalization of R7.9b, and reported total annual CEO compensation of R15m for the year to September 2020. We note that's an increase of 45% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at R6.2m.

On comparing similar companies from the same industry with market caps ranging from R3.0b to R12b, we found that the median CEO total compensation was R12m. From this we gather that Imraan Soomra is paid around the median for CEOs in the industry. Furthermore, Imraan Soomra directly owns R15m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	R6.2m	R6.0m	42%
Other	R8.5m	R4.1m	58%
Total Compensation	R15m	R10m	100%

On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. In Oceana Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Oceana Group Limited's Growth Numbers

Over the past three years, Oceana Group Limited has seen its earnings per share (EPS) grow by 17% per year. It achieved revenue growth of 8.6% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Oceana Group Limited Been A Good Investment?

With a three year total loss of 5.1% for the shareholders, Oceana Group Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Oceana Group that investors should look into moving forward.

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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