Shareholders May Be Wary Of Increasing Italtile Limited's (JSE:ITE) CEO Compensation Package

Key Insights

• Italtile's Annual General Meeting to take place on 14th of November
• CEO Lance Foxcroft's total compensation includes salary of R4.49m
• The total compensation is similar to the average for the industry
• Italtile's EPS declined by 4.4% over the past three years while total shareholder loss over the past three years was 10%

The results at Italtile Limited (JSE:ITE) have been quite disappointing recently and CEO Lance Foxcroft 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 14th of November. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Italtile

Comparing Italtile Limited's CEO Compensation With The Industry

Our data indicates that Italtile Limited has a market capitalization of R16b, and total annual CEO compensation was reported as R19m for the year to June 2024. That's a notable decrease of 21% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at R4.5m.

On examining similar-sized companies in the South African Specialty Retail industry with market capitalizations between R6.9b and R28b, we discovered that the median CEO total compensation of that group was R16m. This suggests that Italtile remunerates its CEO largely in line with the industry average. Furthermore, Lance Foxcroft directly owns R66m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	R4.5m	R4.1m	24%
Other	R14m	R19m	76%
Total Compensation	R19m	R23m	100%

Talking in terms of the industry, salary represented approximately 42% of total compensation out of all the companies we analyzed, while other remuneration made up 58% of the pie. Italtile sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Italtile Limited's Growth

Over the last three years, Italtile Limited has shrunk its earnings per share by 4.4% per year. In the last year, its revenue changed by just 0.8%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Italtile Limited Been A Good Investment?

With a three year total loss of 10% for the shareholders, Italtile Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 Italtile that you should be aware of before investing.

Important note: Italtile 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. 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.