Most Shareholders Will Probably Find That The CEO Compensation For Washington H. Soul Pattinson and Company Limited (ASX:SOL) Is Reasonable

Key Insights

• Washington H. Soul Pattinson to hold its Annual General Meeting on 8th of December
• Salary of AU$1.57m is part of CEO Todd Barlow's total remuneration
• The overall pay is comparable to the industry average
• Washington H. Soul Pattinson's total shareholder return over the past three years was 26% while its EPS was down 21% over the past three years

Despite positive share price growth of 26% for Washington H. Soul Pattinson and Company Limited (ASX:SOL) 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 8th of December. 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.

Check out our latest analysis for Washington H. Soul Pattinson

Comparing Washington H. Soul Pattinson and Company Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Washington H. Soul Pattinson and Company Limited has a market capitalization of AU$12b, and reported total annual CEO compensation of AU$6.0m for the year to July 2023. Notably, that's an increase of 67% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.6m.

For comparison, other companies in the Australian Diversified Financial industry with market capitalizations ranging between AU$6.1b and AU$18b had a median total CEO compensation of AU$6.0m. So it looks like Washington H. Soul Pattinson compensates Todd Barlow in line with the median for the industry. Moreover, Todd Barlow also holds AU$9.8m worth of Washington H. Soul Pattinson stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$1.6m	AU$1.5m	26%
Other	AU$4.4m	AU$2.1m	74%
Total Compensation	AU$6.0m	AU$3.6m	100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Washington H. Soul Pattinson pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Washington H. Soul Pattinson and Company Limited's Growth

Over the last three years, Washington H. Soul Pattinson and Company Limited has shrunk its earnings per share by 21% per year. Its revenue is down 60% over the previous year.

Overall this is not a very positive result for shareholders. 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 Washington H. Soul Pattinson and Company Limited Been A Good Investment?

With a total shareholder return of 26% over three years, Washington H. Soul Pattinson and Company Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Washington H. Soul Pattinson (free visualization of insider trades).

Switching gears from Washington H. Soul Pattinson, 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.

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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.