We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Adcock Ingram Holdings Limited's (JSE:AIP) CEO For Now

As many shareholders of Adcock Ingram Holdings Limited (JSE:AIP) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 22 November 2022. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

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

How Does Total Compensation For Andy Hall Compare With Other Companies In The Industry?

At the time of writing, our data shows that Adcock Ingram Holdings Limited has a market capitalization of R8.1b, and reported total annual CEO compensation of R15m for the year to June 2022. Notably, that's an increase of 24% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at R6.2m.

On comparing similar companies from the same industry with market caps ranging from R3.4b to R14b, we found that the median CEO total compensation was R9.7m. This suggests that Andy Hall is paid more than the median for the industry. Moreover, Andy Hall also holds R1.1m worth of Adcock Ingram Holdings stock directly under their own name.

Component	2022	2021	Proportion (2022)
Salary	R6.2m	R5.4m	40%
Other	R9.2m	R7.0m	60%
Total Compensation	R15m	R12m	100%

On an industry level, around 49% of total compensation represents salary and 51% is other remuneration. Adcock Ingram Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Adcock Ingram Holdings Limited's Growth

Adcock Ingram Holdings Limited's earnings per share (EPS) grew 6.1% per year over the last three years. Its revenue is up 12% over the last year.

We think the revenue growth is good. And the modest growth in EPS isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Adcock Ingram Holdings Limited Been A Good Investment?

Since shareholders would have lost about 4.1% over three years, some Adcock Ingram Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Adcock Ingram Holdings (1 is a bit concerning!) that you should be aware of before investing here.

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. 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.