Does Washington H. Soul Pattinson's (ASX:SOL) CEO Salary Compare Well With The Performance Of The Company?

Todd Barlow has been the CEO of Washington H. Soul Pattinson and Company Limited (ASX:SOL) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Washington H. Soul Pattinson

Comparing Washington H. Soul Pattinson and Company Limited's CEO Compensation With the industry

Our data indicates that Washington H. Soul Pattinson and Company Limited has a market capitalization of AU$6.9b, and total annual CEO compensation was reported as AU$3.5m for the year to July 2020. That's a modest increase of 5.0% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.3m.

For comparison, other companies in the same industry with market capitalizations ranging between AU$5.4b and AU$16b had a median total CEO compensation of AU$3.5m. From this we gather that Todd Barlow is paid around the median for CEOs in the industry. Furthermore, Todd Barlow directly owns AU$4.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. It's interesting to note that Washington H. Soul Pattinson allocates a smaller portion of compensation to salary in comparison 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

Washington H. Soul Pattinson and Company Limited has seen its earnings per share (EPS) increase by 42% a year over the past three years. Its revenue is down 16% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Washington H. Soul Pattinson and Company Limited Been A Good Investment?

We think that the total shareholder return of 86%, over three years, would leave most Washington H. Soul Pattinson and Company Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

As we noted earlier, Washington H. Soul Pattinson pays its CEO in line with similar-sized companies belonging to the same industry. The company is growing EPS and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in Washington H. Soul Pattinson we think you should know about.

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. 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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