Should Shareholders Reconsider Mpact Limited's (JSE:MPT) CEO Compensation Package?

Key Insights

• Mpact will host its Annual General Meeting on 5th of June
• Total pay for CEO Bruce Strong includes R6.85m salary
• Total compensation is 326% above industry average
• Mpact's EPS declined by 2.4% over the past three years while total shareholder loss over the past three years was 14%

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Shareholders will probably not be too impressed with the underwhelming results at Mpact Limited (JSE:MPT) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 5th of June. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Mpact

Comparing Mpact Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Mpact Limited has a market capitalization of R3.8b, and reported total annual CEO compensation of R13m for the year to December 2024. Notably, that's a decrease of 46% over the year before. Notably, the salary which is R6.85m, represents a considerable chunk of the total compensation being paid.

On examining similar-sized companies in the South Africa Packaging industry with market capitalizations between R1.8b and R7.1b, we discovered that the median CEO total compensation of that group was R3.0m. Hence, we can conclude that Bruce Strong is remunerated higher than the industry median. Moreover, Bruce Strong also holds R37m worth of Mpact 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	R6.9m	R6.5m	54%
Other	R5.9m	R17m	46%
Total Compensation	R13m	R24m	100%

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Mpact sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Mpact Limited's Growth Numbers

Over the last three years, Mpact Limited has shrunk its earnings per share by 2.4% per year. In the last year, its revenue is up 3.6%.

Its a bit disappointing to see that the company has failed to grow its EPS. 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. 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 Mpact Limited Been A Good Investment?

With a three year total loss of 14% for the shareholders, Mpact Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 Mpact that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.