Here's What We Learned About The CEO Pay At Santova Limited (JSE:SNV)

This article will reflect on the compensation paid to Glen Gerber who has served as CEO of Santova Limited (JSE:SNV) since 2003. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Santova.

View our latest analysis for Santova

Comparing Santova Limited's CEO Compensation With the industry

Our data indicates that Santova Limited has a market capitalization of R382m, and total annual CEO compensation was reported as R3.7m for the year to February 2020. We note that's a decrease of 23% compared to last year. We note that the salary portion, which stands at R3.45m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below R3.0b, reported a median total CEO compensation of R2.5m. Accordingly, our analysis reveals that Santova Limited pays Glen Gerber north of the industry median. Furthermore, Glen Gerber directly owns R16m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 74% of total compensation out of all the companies we analyzed, while other remuneration made up 26% of the pie. Santova pays out 94% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Santova Limited's Growth

Santova Limited's earnings per share (EPS) grew 1.6% per year over the last three years. In the last year, its revenue is up 13%.

We would argue that the modest growth in revenue is a notable positive. And the improvement in EPSis modest but respectable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Santova Limited Been A Good Investment?

Given the total shareholder loss of 3.2% over three years, many shareholders in Santova Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Santova pays its CEO higher than the norm for similar-sized companies belonging to the same industry. While we have not been overly impressed by the business performance, the shareholder returns have been utterly depressing, over the last three years. This doesn't look good when you see that Glen is earning more than the industry median. With such poor returns, we would understand if shareholders had concerns related to the CEO's pay.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Santova that investors should look into moving forward.

Important note: Santova 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. 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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