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We Take A Look At Why Kaap Agri Limited's (JSE:KAL) CEO Compensation Is Well Earned

The performance at Kaap Agri Limited (JSE:KAL) has been quite strong recently and CEO Sean Walsh has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 09 February 2023. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for Kaap Agri

Comparing Kaap Agri Limited's CEO Compensation With The Industry

Our data indicates that Kaap Agri Limited has a market capitalization of R2.9b, and total annual CEO compensation was reported as R17m for the year to September 2022. We note that's an increase of 46% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at R5.3m.

For comparison, other companies in the South African Consumer Retailing industry with market capitalizations ranging between R1.7b and R6.8b had a median total CEO compensation of R16m. This suggests that Kaap Agri remunerates its CEO largely in line with the industry average. Moreover, Sean Walsh also holds R9.8m worth of Kaap Agri stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2022

2021

Proportion (2022)

Salary

R5.3m

R4.9m

32%

Other

R12m

R6.7m

68%

Total Compensation

R17m

R12m

100%

On an industry level, roughly 32% of total compensation represents salary and 68% is other remuneration. There isn't a significant difference between Kaap Agri 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.

ceo-compensation
ceo-compensation

A Look at Kaap Agri Limited's Growth Numbers

Kaap Agri Limited's earnings per share (EPS) grew 13% per year over the last three years. Its revenue is up 48% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Kaap Agri Limited Been A Good Investment?

Most shareholders would probably be pleased with Kaap Agri Limited for providing a total return of 64% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Kaap Agri (1 doesn't sit too well with us!) that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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