Does DS Smith Plc’s (LON:SMDS) CEO Pay Matter?

Miles Roberts became the CEO of DS Smith Plc (LON:SMDS) in 2010. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for DS Smith

How Does Miles Roberts’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that DS Smith Plc has a market cap of UK£4.9b, and reported total annual CEO compensation of UK£3.0m for the year to April 2019. While we always look at total compensation first, we note that the salary component is less, at UK£758k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from UK£3.1b to UK£9.2b, and discovered that the median CEO total compensation of that group was UK£2.5m.

So Miles Roberts receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

The graphic below shows how CEO compensation at DS Smith has changed from year to year.

LSE:SMDS CEO Compensation, January 23rd 2020
LSE:SMDS CEO Compensation, January 23rd 2020

Is DS Smith Plc Growing?

On average over the last three years, DS Smith Plc has shrunk earnings per share by 2.1% each year (measured with a line of best fit). In the last year, its revenue is up 6.0%.

Unfortunately there is a complete lack of earnings per share improvement, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has DS Smith Plc Been A Good Investment?

Given the total loss of 3.7% over three years, many shareholders in DS Smith Plc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

Remuneration for Miles Roberts is close enough to the median pay for a CEO of a similar sized company .

Returns have been disappointing and the company is not growing its earnings per share. Suffice it to say, we don’t think the CEO is underpaid! So you may want to check if insiders are buying DS Smith shares with their own money (free access).

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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