Why We Think Sasol Limited's (JSE:SOL) CEO Compensation Is Not Excessive At All

Performance at Sasol Limited (JSE:SOL) has been reasonably good and CEO Fleetwood Grobler has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 02 December 2022. We present our case of why we think CEO compensation looks fair.

Check out the opportunities and risks within the XX Chemicals industry.

Comparing Sasol Limited's CEO Compensation With The Industry

Our data indicates that Sasol Limited has a market capitalization of R189b, and total annual CEO compensation was reported as R43m for the year to June 2022. Notably, that's an increase of 33% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at R11m.

On comparing similar companies in the industry with market capitalizations above R137b, we found that the median total CEO compensation was R57m. So it looks like Sasol compensates Fleetwood Grobler in line with the median for the industry. Moreover, Fleetwood Grobler also holds R8.2m worth of Sasol stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	R11m	R10m	26%
Other	R32m	R22m	74%
Total Compensation	R43m	R32m	100%

On an industry level, around 48% of total compensation represents salary and 52% is other remuneration. Sasol sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Sasol Limited's Growth Numbers

Sasol Limited's earnings per share (EPS) grew 123% per year over the last three years. It achieved revenue growth of 37% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Sasol Limited Been A Good Investment?

Sasol Limited has served shareholders reasonably well, with a total return of 18% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Sasol (1 is concerning!) that you should be aware of before investing here.

Important note: Sasol 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. 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.