We Think Some Shareholders May Hesitate To Increase Netcare Limited's (JSE:NTC) CEO Compensation

Key Insights

• Netcare will host its Annual General Meeting on 7th of February
• CEO Richard Friedland's total compensation includes salary of R11.5m
• The overall pay is 208% above the industry average
• Netcare's EPS grew by 27% over the past three years while total shareholder return over the past three years was 8.1%

CEO Richard Friedland has done a decent job of delivering relatively good performance at Netcare Limited (JSE:NTC) recently. As shareholders go into the upcoming AGM on 7th of February, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for Netcare

How Does Total Compensation For Richard Friedland Compare With Other Companies In The Industry?

At the time of writing, our data shows that Netcare Limited has a market capitalization of R18b, and reported total annual CEO compensation of R39m for the year to September 2024. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at R11m.

For comparison, other companies in the South Africa Healthcare industry with market capitalizations ranging between R7.5b and R30b had a median total CEO compensation of R13m. This suggests that Richard Friedland is paid more than the median for the industry. Furthermore, Richard Friedland directly owns R4.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	R11m	R11m	29%
Other	R28m	R29m	71%
Total Compensation	R39m	R40m	100%

On an industry level, around 56% of total compensation represents salary and 44% is other remuneration. In Netcare's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Netcare Limited's Growth

Netcare Limited's earnings per share (EPS) grew 27% per year over the last three years. In the last year, its revenue is up 6.3%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Netcare Limited Been A Good Investment?

Netcare Limited has generated a total shareholder return of 8.1% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Netcare that investors should be aware of in a dynamic business environment.

Switching gears from Netcare, 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.