We Think Some Shareholders May Hesitate To Increase Quantum Foods Holdings Ltd's (JSE:QFH) CEO Compensation

Key Insights

• Quantum Foods Holdings' Annual General Meeting to take place on 23rd of February
• CEO Hennie Lourens' total compensation includes salary of R3.94m
• The overall pay is comparable to the industry average
• Over the past three years, Quantum Foods Holdings' EPS fell by 89% and over the past three years, the total loss to shareholders 26%

Shareholders of Quantum Foods Holdings Ltd (JSE:QFH) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 23rd of February will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Quantum Foods Holdings

How Does Total Compensation For Hennie Lourens Compare With Other Companies In The Industry?

Our data indicates that Quantum Foods Holdings Ltd has a market capitalization of R900m, and total annual CEO compensation was reported as R6.2m for the year to September 2023. Notably, that's a decrease of 18% over the year before. In particular, the salary of R3.94m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the South African Food industry with market capitalizations below R3.8b, reported a median total CEO compensation of R6.2m. This suggests that Quantum Foods Holdings remunerates its CEO largely in line with the industry average. Moreover, Hennie Lourens also holds R9.4m worth of Quantum Foods Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	R3.9m	R3.7m	63%
Other	R2.3m	R3.9m	37%
Total Compensation	R6.2m	R7.6m	100%

On an industry level, roughly 46% of total compensation represents salary and 54% is other remuneration. Quantum Foods Holdings pays out 63% 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.

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 89% per year. Its revenue is up 15% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Quantum Foods Holdings Ltd Been A Good Investment?

With a three year total loss of 26% for the shareholders, Quantum Foods Holdings Ltd would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Quantum Foods Holdings we think you should know about.

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.