How Is Sims' (ASX:SGM) CEO Paid Relative To Peers?

Alistair Field became the CEO of Sims Limited (ASX:SGM) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Sims pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Sims

Comparing Sims Limited's CEO Compensation With the industry

According to our data, Sims Limited has a market capitalization of AU$2.6b, and paid its CEO total annual compensation worth AU$4.2m over the year to June 2020. We note that's a decrease of 18% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.8m.

For comparison, other companies in the same industry with market capitalizations ranging between AU$1.3b and AU$4.2b had a median total CEO compensation of AU$1.7m. This suggests that Alistair Field is paid more than the median for the industry. Moreover, Alistair Field also holds AU$2.8m worth of Sims stock directly under their own name.

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. Sims 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.

A Look at Sims Limited's Growth Numbers

Sims Limited has reduced its earnings per share by 77% a year over the last three years. It saw its revenue drop 26% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Sims Limited Been A Good Investment?

With a three year total loss of 10% for the shareholders, Sims Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Sims Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. What's equally worrying is that the company isn't growing by our analysis. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Sims that you should be aware of before investing.

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.

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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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