We Think Some Shareholders May Hesitate To Increase Northam Platinum Holdings Limited's (JSE:NPH) CEO Compensation

Key Insights

• Northam Platinum Holdings will host its Annual General Meeting on 30th of October
• Salary of R12.6m is part of CEO Paul Dunne's total remuneration
• The total compensation is 139% higher than the average for the industry
• Northam Platinum Holdings' EPS grew by 1.8% over the past three years while total shareholder loss over the past three years was 34%

In the past three years, the share price of Northam Platinum Holdings Limited (JSE:NPH) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 30th of October could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Northam Platinum Holdings

How Does Total Compensation For Paul Dunne Compare With Other Companies In The Industry?

According to our data, Northam Platinum Holdings Limited has a market capitalization of R45b, and paid its CEO total annual compensation worth R31m over the year to June 2023. Notably, that's a decrease of 47% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at R13m.

In comparison with other companies in the South African Metals and Mining industry with market capitalizations ranging from R19b to R61b, the reported median CEO total compensation was R13m. Accordingly, our analysis reveals that Northam Platinum Holdings Limited pays Paul Dunne north of the industry median. What's more, Paul Dunne holds R4.7m 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	R13m	R12m	41%
Other	R18m	R46m	59%
Total Compensation	R31m	R58m	100%

On an industry level, around 41% of total compensation represents salary and 59% is other remuneration. Our data reveals that Northam Platinum Holdings allocates salary more or less in line with the wider market. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Northam Platinum Holdings Limited's Growth

Over the past three years, Northam Platinum Holdings Limited has seen its earnings per share (EPS) grow by 1.8% per year. In the last year, its revenue is up 16%.

This revenue growth could really point to a brighter future. And, while modest, the EPS growth is noticeable. So while performance isn't amazing, we think it really does seem quite respectable. 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 Northam Platinum Holdings Limited Been A Good Investment?

The return of -34% over three years would not have pleased Northam Platinum Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 3 warning signs for Northam Platinum Holdings that investors should look into moving forward.

Switching gears from Northam Platinum Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.