This Is The Reason Why We Think Heriot REIT Limited's (JSE:HET) CEO Might Be Underpaid

Key Insights

• Heriot REIT will host its Annual General Meeting on 8th of December
• Salary of R4.51m is part of CEO Richard Herring's total remuneration
• Total compensation is 53% below industry average
• Heriot REIT's FFO grew by 26% over the past one year while total shareholder return over the past three years was 99%

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The impressive results at Heriot REIT Limited (JSE:HET) recently will be great news for shareholders. At the upcoming AGM on 8th of December, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. We think the CEO has done a pretty decent job and probably deserves a well-earned pay rise.

See our latest analysis for Heriot REIT

How Does Total Compensation For Richard Herring Compare With Other Companies In The Industry?

At the time of writing, our data shows that Heriot REIT Limited has a market capitalization of R5.7b, and reported total annual CEO compensation of R5.7m for the year to June 2025. That's just a smallish increase of 6.0% on last year. We note that the salary portion, which stands at R4.51m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the South African REITs industry with market capitalizations ranging from R3.4b to R14b, the reported median CEO total compensation was R12m. This suggests that Richard Herring is paid below the industry median. Moreover, Richard Herring also holds R255m worth of Heriot REIT stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 30% of total compensation represents salary and 70% is other remuneration. According to our research, Heriot REIT has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Heriot REIT Limited's Growth Numbers

Heriot REIT Limited's funds from operations (FFO) grew 26% over the last one year. Its revenue is up 23% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, 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 Heriot REIT Limited Been A Good Investment?

Most shareholders would probably be pleased with Heriot REIT Limited for providing a total return of 99% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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. That's why we did our research, and identified 2 warning signs for Heriot REIT (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Heriot REIT, 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.