Yahoo Finance Shareholders May Not Be So Generous With SSE plc's (LON:SSE) CEO Compensation And Here's Why
Key Insights
SSE's Annual General Meeting to take place on 18th of July
Total pay for CEO Paul Morton Phillips-Davies includes UK£999.0k salary
The total compensation is 121% higher than the average for the industry
SSE's total shareholder return over the past three years was 40% while its EPS was down 8.6% over the past three years
Despite strong share price growth of 40% for SSE plc (LON:SSE) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 18th of July. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
View our latest analysis for SSE
Comparing SSE plc's CEO Compensation With The Industry
According to our data, SSE plc has a market capitalization of UK£20b, and paid its CEO total annual compensation worth UK£3.5m over the year to March 2024. We note that's a decrease of 26% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£999k.
On comparing similar companies in the the United Kingdom Electric Utilities industry with market capitalizations above UK£6.2b, we found that the median total CEO compensation was UK£1.6m. This suggests that Paul Morton Phillips-Davies is paid more than the median for the industry. Moreover, Paul Morton Phillips-Davies also holds UK£7.9m worth of SSE stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2024 | 2023 | Proportion (2024) |
Salary | UK£999k | UK£952k | 28% |
Other | UK£2.5m | UK£3.8m | 72% |
Total Compensation | UK£3.5m | UK£4.8m | 100% |
Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. It's interesting to note that SSE allocates a smaller portion of compensation to salary 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.
A Look at SSE plc's Growth Numbers
SSE plc has reduced its earnings per share by 8.6% a year over the last three years. Its revenue is down 16% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has SSE plc Been A Good Investment?
Most shareholders would probably be pleased with SSE plc for providing a total return of 40% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
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.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for SSE that you should be aware of before investing.
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.
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