Shareholders Will Probably Hold Off On Increasing Clientèle Limited's (JSE:CLI) CEO Compensation For The Time Being

Key Insights

• Clientèle will host its Annual General Meeting on 13th of November
• Salary of R8.89m is part of CEO Basil Reekie's total remuneration
• The overall pay is 77% above the industry average
• Over the past three years, Clientèle's EPS fell by 5.6% and over the past three years, the total shareholder return was 65%

Clientèle Limited (JSE:CLI) 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. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 13th of November. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Clientèle

How Does Total Compensation For Basil Reekie Compare With Other Companies In The Industry?

At the time of writing, our data shows that Clientèle Limited has a market capitalization of R4.1b, and reported total annual CEO compensation of R21m for the year to June 2024. Notably, that's an increase of 35% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at R8.9m.

On examining similar-sized companies in the South African Insurance industry with market capitalizations between R1.8b and R7.0b, we discovered that the median CEO total compensation of that group was R12m. This suggests that Basil Reekie is paid more than the median for the industry. Moreover, Basil Reekie also holds R18m worth of Clientèle stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	R8.9m	R8.4m	43%
Other	R12m	R6.9m	57%
Total Compensation	R21m	R15m	100%

On an industry level, roughly 43% of total compensation represents salary and 57% is other remuneration. Although there is a difference in how total compensation is set, Clientèle more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Clientèle Limited's Growth

Clientèle Limited has reduced its earnings per share by 5.6% a year over the last three years. Its revenue is up 6.4% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Clientèle Limited Been A Good Investment?

We think that the total shareholder return of 65%, over three years, would leave most Clientèle Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

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. In our study, we found 2 warning signs for Clientèle you should be aware of, and 1 of them shouldn't be ignored.

Important note: Clientèle 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.