Increases to Woolworths Holdings Limited's (JSE:WHL) CEO Compensation Might Cool off for now

Key Insights

• Woolworths Holdings will host its Annual General Meeting on 25th of November
• Salary of R19.4m is part of CEO Roy Bagattini's total remuneration
• Total compensation is 58% above industry average
• Woolworths Holdings' total shareholder return over the past three years was 45% while its EPS was down 13% over the past three years

Woolworths Holdings Limited (JSE:WHL) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 25th of November. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Woolworths Holdings

How Does Total Compensation For Roy Bagattini Compare With Other Companies In The Industry?

Our data indicates that Woolworths Holdings Limited has a market capitalization of R61b, and total annual CEO compensation was reported as R61m for the year to June 2024. Notably, that's a decrease of 27% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at R19m.

On examining similar-sized companies in the South Africa Multiline Retail industry with market capitalizations between R36b and R117b, we discovered that the median CEO total compensation of that group was R38m. Accordingly, our analysis reveals that Woolworths Holdings Limited pays Roy Bagattini north of the industry median. Moreover, Roy Bagattini also holds R215m worth of Woolworths Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	R19m	R18m	32%
Other	R41m	R66m	68%
Total Compensation	R61m	R84m	100%

Speaking on an industry level, salary and non-salary portions, both make up 50% each of the total remuneration. Woolworths Holdings pays a modest slice of remuneration through salary, as compared 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.

Woolworths Holdings Limited's Growth

Over the last three years, Woolworths Holdings Limited has shrunk its earnings per share by 13% per year. In the last year, its revenue is up 5.8%.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Woolworths Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with Woolworths Holdings Limited for providing a total return of 45% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which is concerning) in Woolworths Holdings we think you should know about.

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. 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.