Here's Why Shareholders May Want To Be Cautious With Increasing Tiger Brands Limited's (JSE:TBS) CEO Pay Packet

Tiger Brands Limited (JSE:TBS) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 21 February 2023. 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.

View our latest analysis for Tiger Brands

How Does Total Compensation For Noel Doyle Compare With Other Companies In The Industry?

According to our data, Tiger Brands Limited has a market capitalization of R33b, and paid its CEO total annual compensation worth R10m over the year to September 2022. That's just a smallish increase of 3.3% on last year. Notably, the salary which is R8.88m, represents most of the total compensation being paid.

For comparison, other companies in the South African Food industry with market capitalizations ranging between R18b and R57b had a median total CEO compensation of R6.8m. Accordingly, our analysis reveals that Tiger Brands Limited pays Noel Doyle north of the industry median. Furthermore, Noel Doyle directly owns R2.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	R8.9m	R8.6m	86%
Other	R1.5m	R1.4m	14%
Total Compensation	R10m	R10m	100%

Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. According to our research, Tiger Brands has allocated a higher percentage of pay to salary in comparison to the wider industry. 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.

A Look at Tiger Brands Limited's Growth Numbers

Tiger Brands Limited has reduced its earnings per share by 11% a year over the last three years. In the last year, its revenue is up 9.9%.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Tiger Brands Limited Been A Good Investment?

We think that the total shareholder return of 41%, over three years, would leave most Tiger Brands Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Tiger Brands that investors should be aware of in a dynamic business environment.

Switching gears from Tiger Brands, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.