Stock Analysis

Does TeleMasters Holdings' (JSE:TLM) CEO Salary Compare Well With The Performance Of The Company?

JSE:TLM
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Jaco-Muller Voigt became the CEO of TeleMasters Holdings Limited (JSE:TLM) in 2018, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for TeleMasters Holdings.

View our latest analysis for TeleMasters Holdings

Comparing TeleMasters Holdings Limited's CEO Compensation With the industry

According to our data, TeleMasters Holdings Limited has a market capitalization of R61m, and paid its CEO total annual compensation worth R1.4m over the year to June 2020. That is, the compensation was roughly the same as last year. It is worth noting that the CEO compensation consists entirely of the salary, worth R1.4m.

For comparison, other companies in the industry with market capitalizations below R3.0b, reported a median total CEO compensation of R3.7m. That is to say, Jaco-Muller Voigt is paid under the industry median. Moreover, Jaco-Muller Voigt also holds R5.8m worth of TeleMasters Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary R1.4m - 100%
Other - -
Total CompensationR1.4m R1.4m100%

Speaking on an industry level, nearly 87% of total compensation represents salary, while the remainder of 13% is other remuneration. Speaking on a company level, TeleMasters Holdings prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
JSE:TLM CEO Compensation December 10th 2020

A Look at TeleMasters Holdings Limited's Growth Numbers

TeleMasters Holdings Limited has reduced its earnings per share by 24% a year over the last three years. In the last year, its revenue is down 20%.

Overall this is not a very positive result for shareholders. 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. 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 TeleMasters Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with TeleMasters Holdings Limited for providing a total return of 200% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

TeleMasters Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, TeleMasters Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 6 warning signs for TeleMasters Holdings (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from TeleMasters Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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