Jebb McIntosh became the CEO of Combined Motor Holdings Limited (JSE:CMH) in 2001, 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 assess whether Combined Motor Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Combined Motor Holdings Limited's CEO Compensation With the industry
According to our data, Combined Motor Holdings Limited has a market capitalization of R1.2b, and paid its CEO total annual compensation worth R9.2m over the year to February 2020. That's a slightly lower by 3.9% over the previous year. Notably, the salary which is R6.21m, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under R3.1b, the reported median total CEO compensation was R2.4m. Accordingly, our analysis reveals that Combined Motor Holdings Limited pays Jebb McIntosh north of the industry median. Moreover, Jebb McIntosh also holds R407m worth of Combined Motor Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 46% of total compensation represents salary and 54% is other remuneration. It's interesting to note that Combined Motor Holdings pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Combined Motor Holdings Limited's Growth
Combined Motor Holdings Limited has reduced its earnings per share by 27% a year over the last three years. It saw its revenue drop 20% over the last year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Combined Motor Holdings Limited Been A Good Investment?
With a three year total loss of 30% for the shareholders, Combined Motor Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Jebb is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 6 warning signs for Combined Motor Holdings (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
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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