South32 Limited's (ASX:S32) CEO Will Probably Have Their Compensation Approved By Shareholders

We have been pretty impressed with the performance at South32 Limited (ASX:S32) recently and CEO Graham Kerr deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 27 October 2022. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Our analysis indicates that S32 is potentially undervalued!

Comparing South32 Limited's CEO Compensation With The Industry

At the time of writing, our data shows that South32 Limited has a market capitalization of AU$17b, and reported total annual CEO compensation of US$4.4m for the year to June 2022. That's a notable decrease of 8.3% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.

In comparison with other companies in the industry with market capitalizations over AU$13b, the reported median total CEO compensation was US$3.8m. From this we gather that Graham Kerr is paid around the median for CEOs in the industry. What's more, Graham Kerr holds AU$15m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	US$1.1m	US$1.3m	26%
Other	US$3.3m	US$3.5m	74%
Total Compensation	US$4.4m	US$4.8m	100%

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. South32 pays a modest slice of remuneration through salary, as compared 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 South32 Limited's Growth Numbers

South32 Limited's earnings per share (EPS) grew 96% per year over the last three years. In the last year, its revenue is up 69%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has South32 Limited Been A Good Investment?

We think that the total shareholder return of 67%, over three years, would leave most South32 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.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for South32 you should be aware of, and 1 of them shouldn't be ignored.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.