Despite strong share price growth of 39% for Quantum Foods Holdings Ltd (JSE:QFH) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 24 February 2023 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. 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.

See our latest analysis for Quantum Foods Holdings

How Does Total Compensation For Hennie Lourens Compare With Other Companies In The Industry?

According to our data, Quantum Foods Holdings Ltd has a market capitalization of R918m, and paid its CEO total annual compensation worth R7.6m over the year to September 2022. We note that's a decrease of 21% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at R3.7m.

On comparing similar-sized companies in the South African Food industry with market capitalizations below R3.6b, we found that the median total CEO compensation was R7.6m. So it looks like Quantum Foods Holdings compensates Hennie Lourens in line with the median for the industry. Furthermore, Hennie Lourens directly owns R9.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. Our data reveals that Quantum Foods Holdings allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Quantum Foods Holdings Ltd's Growth Numbers

Over the last three years, Quantum Foods Holdings Ltd has shrunk its earnings per share by 49% per year. Its revenue is up 11% over the last year.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Quantum Foods Holdings Ltd Been A Good Investment?

We think that the total shareholder return of 39%, over three years, would leave most Quantum Foods Holdings Ltd shareholders smiling. 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.

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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 2 which can't be ignored) in Quantum Foods Holdings we think you should know about.

Switching gears from Quantum Foods 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.

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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