Service Stream Limited's (ASX:SSM) CEO Might Not Expect Shareholders To Be So Generous This Year

The results at Service Stream Limited (ASX:SSM) have been quite disappointing recently and CEO Leigh MacKender bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 19 October 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Service Stream

Comparing Service Stream Limited's CEO Compensation With the industry

According to our data, Service Stream Limited has a market capitalization of AU$508m, and paid its CEO total annual compensation worth AU$1.1m over the year to June 2021. That's a notable decrease of 34% on last year. Notably, the salary which is AU$879.0k, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between AU$272m and AU$1.1b had a median total CEO compensation of AU$827k. This suggests that Service Stream remunerates its CEO largely in line with the industry average. What's more, Leigh MacKender holds AU$1.3m worth of shares in the company in their own name.

Component	2021	2020	Proportion (2021)
Salary	AU$879k	AU$879k	82%
Other	AU$186k	AU$728k	18%
Total Compensation	AU$1.1m	AU$1.6m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. There isn't a significant difference between Service Stream and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Service Stream Limited's Growth

Over the last three years, Service Stream Limited has shrunk its earnings per share by 22% per year. In the last year, its revenue is down 13%.

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 Service Stream Limited Been A Good Investment?

Few Service Stream Limited shareholders would feel satisfied with the return of -40% over three years. This suggests it would be unwise for the company to pay the CEO too 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 compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Service Stream that you should be aware of before investing.

Switching gears from Service Stream, 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.

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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