This Is Why We Think Rand Merchant Investment Holdings Limited's (JSE:RMI) CEO Might Get A Pay Rise Approved By Shareholders

Shareholders will probably not be disappointed by the robust results at Rand Merchant Investment Holdings Limited (JSE:RMI) recently and they will be keeping this in mind as they go into the AGM on 24 November 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

See our latest analysis for Rand Merchant Investment Holdings

How Does Total Compensation For Herman Bosman Compare With Other Companies In The Industry?

At the time of writing, our data shows that Rand Merchant Investment Holdings Limited has a market capitalization of R66b, and reported total annual CEO compensation of R14m for the year to June 2021. That's a notable increase of 15% on last year. In particular, the salary of R9.83m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from R31b to R99b, the reported median CEO total compensation was R34m. In other words, Rand Merchant Investment Holdings pays its CEO lower than the industry median. What's more, Herman Bosman holds R34m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	R9.8m	R8.5m	72%
Other	R3.9m	R3.4m	28%
Total Compensation	R14m	R12m	100%

On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. It's interesting to note that Rand Merchant Investment Holdings pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Rand Merchant Investment Holdings Limited's Growth Numbers

Over the last three years, Rand Merchant Investment Holdings Limited has shrunk its earnings per share by 9.8% per year. It achieved revenue growth of 15% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Rand Merchant Investment Holdings Limited Been A Good Investment?

With a total shareholder return of 27% over three years, Rand Merchant Investment Holdings Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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. That's why we did some digging and identified 1 warning sign for Rand Merchant Investment Holdings that you should be aware of before investing.

Important note: Rand Merchant Investment Holdings 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.

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.

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