Bruno Carleo became the CEO of Putprop Limited (JSE:PPR) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Putprop.
Check out our latest analysis for Putprop
Comparing Putprop Limited's CEO Compensation With the industry
According to our data, Putprop Limited has a market capitalization of R150m, and paid its CEO total annual compensation worth R1.6m over the year to June 2020. Notably, that's an increase of 8.1% over the year before. We note that the salary portion, which stands at R1.15m constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under R3.1b, the reported median total CEO compensation was R3.4m. Accordingly, Putprop pays its CEO under the industry median. Moreover, Bruno Carleo also holds R7.8m worth of Putprop stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | R1.1m | R1.1m | 70% |
| Other | R485k | R436k | 30% |
| Total Compensation | R1.6m | R1.5m | 100% |
Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. There isn't a significant difference between Putprop and the broader market, in terms of salary allocation in the overall compensation package. 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 Putprop Limited's Growth Numbers
Putprop Limited has reduced its earnings per share by 58% a year over the last three years. It saw its revenue drop 30% over the last year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Putprop Limited Been A Good Investment?
Given the total shareholder loss of 40% over three years, many shareholders in Putprop 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...
As we noted earlier, Putprop pays its CEO lower than the norm for similar-sized companies belonging to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 6 warning signs for Putprop (2 make us uncomfortable!) that you should be aware of before investing here.
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. 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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About JSE:PPR
Moderate and good value.
