What We Learned About Slater and Gordon's (ASX:SGH) CEO Pay
This article will reflect on the compensation paid to John Somerville who has served as CEO of Slater and Gordon Limited ( ASX:SGH ) since 2018. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Slater and Gordon.
View our latest analysis for Slater and Gordon
Comparing Slater and Gordon Limited's CEO Compensation With the industry
Our data indicates that Slater and Gordon Limited has a market capitalization of AU$134m, and total annual CEO compensation was reported as AU$1.9m for the year to June 2020. We note that's an increase of 127% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$514k.
In comparison with other companies in the industry with market capitalizations under AU$282m, the reported median total CEO compensation was AU$529k. Accordingly, our analysis reveals that Slater and Gordon Limited pays John Somerville north of the industry median.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$514k | AU$529k | 28% |
Other | AU$1.3m | AU$290k | 72% |
Total Compensation | AU$1.9m | AU$819k | 100% |
Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Slater and Gordon sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Slater and Gordon Limited's Growth Numbers
Slater and Gordon Limited has seen its earnings per share (EPS) increase by 139% a year over the past three years. In the last year, its revenue is up 3.5%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Slater and Gordon Limited Been A Good Investment?
Given the total shareholder loss of 85% over three years, many shareholders in Slater and Gordon Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As previously discussed, John is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Slater and Gordon that investors should think about before committing capital to this stock.
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.
