Here's Why Discovery Limited's (JSE:DSY) CEO Might See A Pay Rise Soon

Key Insights

• Discovery's Annual General Meeting to take place on 16th of November
• CEO Adrian Gore's total compensation includes salary of R7.99m
• The overall pay is 51% below the industry average
• Over the past three years, Discovery's EPS grew by 276% and over the past three years, the total shareholder return was 3.3%

Shareholders will be pleased by the robust performance of Discovery Limited (JSE:DSY) recently and this will be kept in mind in the upcoming AGM on 16th of November. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

View our latest analysis for Discovery

How Does Total Compensation For Adrian Gore Compare With Other Companies In The Industry?

Our data indicates that Discovery Limited has a market capitalization of R86b, and total annual CEO compensation was reported as R28m for the year to June 2023. That's a notable increase of 61% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at R8.0m.

On comparing similar companies from the South African Insurance industry with market caps ranging from R37b to R119b, we found that the median CEO total compensation was R56m. In other words, Discovery pays its CEO lower than the industry median. What's more, Adrian Gore holds R11b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	R8.0m	R7.6m	29%
Other	R20m	R9.7m	71%
Total Compensation	R28m	R17m	100%

On an industry level, roughly 32% of total compensation represents salary and 68% is other remuneration. Although there is a difference in how total compensation is set, Discovery more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Discovery Limited's Growth

Discovery Limited has seen its earnings per share (EPS) increase by 276% a year over the past three years. In the last year, its revenue is up 29%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Discovery Limited Been A Good Investment?

Discovery Limited has not done too badly by shareholders, with a total return of 3.3%, over three years. It would be nice to see that metric improve in the future. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

The company's overall performance, while not bad, could be better. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Discovery.

Important note: Discovery 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.