What Can We Make Of Afrimat's (JSE:AFT) CEO Compensation?

This article will reflect on the compensation paid to Andries van Heerden who has served as CEO of Afrimat Limited (JSE:AFT) since 2006. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Afrimat.

See our latest analysis for Afrimat

How Does Total Compensation For Andries van Heerden Compare With Other Companies In The Industry?

Our data indicates that Afrimat Limited has a market capitalization of R5.9b, and total annual CEO compensation was reported as R10.0m for the year to February 2020. We note that's an increase of 11% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at R4.8m.

In comparison with other companies in the industry with market capitalizations ranging from R2.9b to R12b, the reported median CEO total compensation was R9.2m. So it looks like Afrimat compensates Andries van Heerden in line with the median for the industry. Furthermore, Andries van Heerden directly owns R46m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. Afrimat pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Afrimat Limited's Growth

Afrimat Limited has seen its earnings per share (EPS) increase by 19% a year over the past three years. It saw its revenue drop 3.3% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Afrimat Limited Been A Good Investment?

We think that the total shareholder return of 58%, over three years, would leave most Afrimat Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As previously discussed, Andries is compensated close to the median for companies of its size, and which belong to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Andries is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

So you may want to check if insiders are buying Afrimat shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. 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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