This article will reflect on the compensation paid to Friedel Sass who has served as CEO of Bowler Metcalf Limited (JSE:BCF) since 2011. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Bowler Metcalf Limited's CEO Compensation With the industry
Our data indicates that Bowler Metcalf Limited has a market capitalization of R632m, and total annual CEO compensation was reported as R4.1m for the year to June 2020. We note that's a decrease of 12% compared to last year. Notably, the salary which is R3.32m, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under R3.1b, the reported median total CEO compensation was R2.3m. This suggests that Friedel Sass is paid more than the median for the industry. What's more, Friedel Sass holds R4.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 82% of total compensation represents salary, while the remainder of 18% is other remuneration. Although there is a difference in how total compensation is set, Bowler Metcalf more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Bowler Metcalf Limited's Growth
Bowler Metcalf Limited's earnings per share (EPS) grew 2.9% per year over the last three years. Its revenue is up 3.0% over the last year.
We'd prefer higher revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Bowler Metcalf Limited Been A Good Investment?
Most shareholders would probably be pleased with Bowler Metcalf Limited for providing a total return of 92% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we touched on above, Bowler Metcalf Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Still, shareholder returns for the company are very impressive for the last three years. On the other hand, EPS growth — over the same period — is not as impressive. All things considered, we don't think there's a reason to criticize CEO compensation, though we hope Bowler Metcalf will post healthier EPS growth moving forward.
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 did our research and spotted 2 warning signs for Bowler Metcalf that investors should look into moving forward.
Important note: Bowler Metcalf 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. 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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