We Think Some Shareholders May Hesitate To Increase Putprop Limited's (JSE:PPR) CEO Compensation

Key Insights

• Putprop's Annual General Meeting to take place on 6th of November
• Total pay for CEO Bruno Carleo includes R1.60m salary
• The overall pay is comparable to the industry average
• Putprop's EPS grew by 20% over the past three years while total shareholder loss over the past three years was 3.7%

In the past three years, the share price of Putprop Limited (JSE:PPR) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 6th of November. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Putprop

How Does Total Compensation For Bruno Carleo Compare With Other Companies In The Industry?

According to our data, Putprop Limited has a market capitalization of R146m, and paid its CEO total annual compensation worth R2.2m over the year to June 2024. Notably, that's an increase of 13% over the year before. We note that the salary portion, which stands at R1.60m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the South Africa Real Estate industry with market capitalizations under R3.5b, the reported median total CEO compensation was R2.9m. From this we gather that Bruno Carleo is paid around the median for CEOs in the industry. What's more, Bruno Carleo holds R7.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	R1.6m	R1.5m	73%
Other	R592k	R439k	27%
Total Compensation	R2.2m	R1.9m	100%

Speaking on an industry level, nearly 52% of total compensation represents salary, while the remainder of 48% is other remuneration. Putprop pays out 73% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Putprop Limited's Growth Numbers

Putprop Limited has seen its earnings per share (EPS) increase by 20% a year over the past three years. Its revenue is up 19% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Putprop Limited Been A Good Investment?

Given the total shareholder loss of 3.7% over three years, many shareholders in Putprop Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Putprop you should be aware of, and 2 of them are a bit concerning.

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.