Most Shareholders Will Probably Find That The CEO Compensation For Quantum Foods Holdings Ltd (JSE:QFH) Is Reasonable

The share price of Quantum Foods Holdings Ltd (JSE:QFH) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. The upcoming AGM on 24 February 2023 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Quantum Foods Holdings

Comparing Quantum Foods Holdings Ltd's CEO Compensation With The Industry

According to our data, Quantum Foods Holdings Ltd has a market capitalization of R918m, and paid its CEO total annual compensation worth R7.6m over the year to September 2022. We note that's a decrease of 21% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at R3.7m.

In comparison with other companies in the South African Food industry with market capitalizations under R3.6b, the reported median total CEO compensation was R7.6m. From this we gather that Hennie Lourens is paid around the median for CEOs in the industry. What's more, Hennie Lourens holds R9.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	R3.7m	R3.6m	49%
Other	R3.9m	R6.1m	51%
Total Compensation	R7.6m	R9.7m	100%

On an industry level, around 49% of total compensation represents salary and 51% is other remuneration. There isn't a significant difference between Quantum Foods Holdings and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Quantum Foods Holdings Ltd's Growth Numbers

Over the last three years, Quantum Foods Holdings Ltd has shrunk its earnings per share by 49% per year. Its revenue is up 11% over the last year.

Few shareholders would be pleased to read that EPS have declined. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Quantum Foods Holdings Ltd Been A Good Investment?

Boasting a total shareholder return of 39% over three years, Quantum Foods Holdings Ltd has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 5 warning signs (and 2 which shouldn't be ignored) in Quantum Foods Holdings we think you should know about.

Important note: Quantum Foods Holdings 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. 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.