This Is Why Washington H. Soul Pattinson and Company Limited's (ASX:SOL) CEO Compensation Looks Appropriate

CEO Todd Barlow has done a decent job of delivering relatively good performance at Washington H. Soul Pattinson and Company Limited (ASX:SOL) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 10 December 2021. We present our case of why we think CEO compensation looks fair.

Check out 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$12b, and total annual CEO compensation was reported as AU$3.0m for the year to July 2021. We note that's a decrease of 15% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.3m.

On examining similar-sized companies in the industry with market capitalizations between AU$5.6b and AU$17b, we discovered that the median CEO total compensation of that group was AU$3.8m. This suggests that Washington H. Soul Pattinson remunerates its CEO largely in line with the industry average. Furthermore, Todd Barlow directly owns AU$4.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	AU$1.3m	AU$1.3m	44%
Other	AU$1.7m	AU$2.2m	56%
Total Compensation	AU$3.0m	AU$3.5m	100%

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. In Washington H. Soul Pattinson's case, non-salary compensation represents a greater slice of total remuneration, 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 Washington H. Soul Pattinson and Company Limited's Growth Numbers

Over the last three years, Washington H. Soul Pattinson and Company Limited has shrunk its earnings per share by 16% per year. In the last year, its revenue is up 18%.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 28% 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.

In Summary...

Although the company has performed relatively well, we still think there are some areas that could be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Washington H. Soul Pattinson (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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.

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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.