Tim Vaughan has been the CEO of Tradehold Limited (JSE:TDH) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Tradehold pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Tradehold
Comparing Tradehold Limited's CEO Compensation With the industry
At the time of writing, our data shows that Tradehold Limited has a market capitalization of R2.1b, and reported total annual CEO compensation of UK£427k for the year to February 2020. That's a notable increase of 19% on last year. In particular, the salary of UK£292.0k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under R2.9b, the reported median total CEO compensation was UK£170k. Hence, we can conclude that Tim Vaughan is remunerated higher than the industry median.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | UK£292k | UK£274k | 68% |
| Other | UK£135k | UK£85k | 32% |
| Total Compensation | UK£427k | UK£359k | 100% |
On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. Although there is a difference in how total compensation is set, Tradehold more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Tradehold Limited's Growth
Over the last three years, Tradehold Limited has shrunk its earnings per share by 93% per year. It saw its revenue drop 15% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Tradehold Limited Been A Good Investment?
Since shareholders would have lost about 43% over three years, some Tradehold Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As previously discussed, Tim is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Tradehold (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
Important note: Tradehold is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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About JSE:CPP
Collins Property Group
An investment holding company, owns, develops, manages, and leases real estate properties.
Established dividend payer moderate.
