It Looks Like Liberty Two Degrees Limited's (JSE:L2D) CEO May Expect Their Salary To Be Put Under The Microscope

The results at Liberty Two Degrees Limited (JSE:L2D) have been quite disappointing recently and CEO Amelia Beattie bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 07 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Liberty Two Degrees

Comparing Liberty Two Degrees Limited's CEO Compensation With the industry

According to our data, Liberty Two Degrees Limited has a market capitalization of R4.1b, and paid its CEO total annual compensation worth R7.4m over the year to December 2020. Notably, that's a decrease of 19% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at R3.1m.

On comparing similar companies from the same industry with market caps ranging from R1.5b to R5.8b, we found that the median CEO total compensation was R6.8m. So it looks like Liberty Two Degrees compensates Amelia Beattie in line with the median for the industry. What's more, Amelia Beattie holds R1.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	R3.1m	R2.8m	42%
Other	R4.3m	R6.4m	58%
Total Compensation	R7.4m	R9.2m	100%

Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. In Liberty Two Degrees' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Liberty Two Degrees Limited's Growth

Liberty Two Degrees Limited has reduced its earnings per share by 92% a year over the last three years. Its revenue is down 14% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Liberty Two Degrees Limited Been A Good Investment?

Given the total shareholder loss of 19% over three years, many shareholders in Liberty Two Degrees Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Liberty Two Degrees that investors should think about before committing capital to this stock.

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. 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.
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