Here's Why Shareholders May Want To Be Cautious With Increasing Northam Platinum Holdings Limited's (JSE:NPH) CEO Pay Packet
Key Insights
Northam Platinum Holdings' Annual General Meeting to take place on 30th of October
Total pay for CEO Paul Dunne includes R12.6m salary
The overall pay is 139% above the industry average
Northam Platinum Holdings' three-year loss to shareholders was 34% while its EPS grew by 1.8% over the past three years
In the past three years, the share price of Northam Platinum Holdings Limited (JSE:NPH) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 30th of October. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
View our latest analysis for Northam Platinum Holdings
How Does Total Compensation For Paul Dunne Compare With Other Companies In The Industry?
Our data indicates that Northam Platinum Holdings Limited has a market capitalization of R45b, and total annual CEO compensation was reported as R31m for the year to June 2023. We note that's a decrease of 47% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at R13m.
On examining similar-sized companies in the South African Metals and Mining industry with market capitalizations between R19b and R61b, we discovered that the median CEO total compensation of that group was R13m. This suggests that Paul Dunne is paid more than the median for the industry. Moreover, Paul Dunne also holds R4.7m worth of Northam Platinum Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | R13m | R12m | 41% |
Other | R18m | R46m | 59% |
Total Compensation | R31m | R58m | 100% |
On an industry level, around 41% of total compensation represents salary and 59% is other remuneration. There isn't a significant difference between Northam Platinum Holdings and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Northam Platinum Holdings Limited's Growth Numbers
Northam Platinum Holdings Limited's earnings per share (EPS) grew 1.8% per year over the last three years. Its revenue is up 16% over the last year.
This revenue growth could really point to a brighter future. And, while modest, the EPS growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Northam Platinum Holdings Limited Been A Good Investment?
The return of -34% over three years would not have pleased Northam Platinum Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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 can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Northam Platinum Holdings that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
