Here's Why Shareholders Should Examine Kumba Iron Ore Limited's (JSE:KIO) CEO Compensation Package More Closely

Key Insights

• Kumba Iron Ore will host its Annual General Meeting on 4th of June
• CEO Mpumi Zikalala's total compensation includes salary of R8.96m
• The total compensation is similar to the average for the industry
• Over the past three years, Kumba Iron Ore's EPS fell by 24% and over the past three years, the total loss to shareholders 31%

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Kumba Iron Ore Limited (JSE:KIO) has not performed well recently and CEO Mpumi Zikalala will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 4th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Kumba Iron Ore

How Does Total Compensation For Mpumi Zikalala Compare With Other Companies In The Industry?

Our data indicates that Kumba Iron Ore Limited has a market capitalization of R93b, and total annual CEO compensation was reported as R30m for the year to December 2024. We note that's an increase of 13% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at R9.0m.

On examining similar-sized companies in the South African Metals and Mining industry with market capitalizations between R72b and R215b, we discovered that the median CEO total compensation of that group was R32m. From this we gather that Mpumi Zikalala is paid around the median for CEOs in the industry. What's more, Mpumi Zikalala holds R6.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	R9.0m	R8.4m	30%
Other	R21m	R18m	70%
Total Compensation	R30m	R27m	100%

Talking in terms of the industry, salary represented approximately 55% of total compensation out of all the companies we analyzed, while other remuneration made up 45% of the pie. In Kumba Iron Ore's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Kumba Iron Ore Limited's Growth

Kumba Iron Ore Limited has reduced its earnings per share by 24% a year over the last three years. It saw its revenue drop 21% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Kumba Iron Ore Limited Been A Good Investment?

The return of -31% over three years would not have pleased Kumba Iron Ore Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which shouldn't be ignored) in Kumba Iron Ore we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.