Shareholders May Be More Conservative With Steinhoff International Holdings N.V.'s (JSE:SNH) CEO Compensation For Now

Key Insights

• Steinhoff International Holdings will host its Annual General Meeting on 22nd of March
• Total pay for CEO Louis du Preez includes €1.34m salary
• Total compensation is 1,959% above industry average
• Steinhoff International Holdings' EPS grew by 16% over the past three years while total shareholder loss over the past three years was 67%

The underwhelming share price performance of Steinhoff International Holdings N.V. (JSE:SNH) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 22nd of March could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Steinhoff International Holdings

Comparing Steinhoff International Holdings N.V.'s CEO Compensation With The Industry

According to our data, Steinhoff International Holdings N.V. has a market capitalization of R1.2b, and paid its CEO total annual compensation worth €3.5m over the year to September 2022. That's a notable decrease of 8.4% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €1.3m.

For comparison, other companies in the South Africa Multiline Retail industry with market capitalizations below R3.7b, reported a median total CEO compensation of €172k. Hence, we can conclude that Louis du Preez is remunerated higher than the industry median.

Component	2022	2021	Proportion (2022)
Salary	€1.3m	€1.3m	38%
Other	€2.2m	€2.6m	62%
Total Compensation	€3.5m	€3.9m	100%

On an industry level, roughly 42% of total compensation represents salary and 58% is other remuneration. It's interesting to note that Steinhoff International Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Steinhoff International Holdings N.V.'s Growth Numbers

Over the past three years, Steinhoff International Holdings N.V. has seen its earnings per share (EPS) grow by 16% per year. It achieved revenue growth of 12% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Steinhoff International Holdings N.V. Been A Good Investment?

The return of -67% over three years would not have pleased Steinhoff International Holdings N.V. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for Steinhoff International Holdings you should be aware of, and 3 of them are concerning.

Important note: Steinhoff International Holdings 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.