Shareholders May Not Be So Generous With Sulzer Ltd's (VTX:SUN) CEO Compensation And Here's Why

Under the guidance of CEO Greg Poux-Guillaume, Sulzer Ltd (VTX:SUN) has performed reasonably well recently. As shareholders go into the upcoming AGM on 14 April 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for Sulzer

Comparing Sulzer Ltd's CEO Compensation With the industry

Our data indicates that Sulzer Ltd has a market capitalization of CHF3.7b, and total annual CEO compensation was reported as CHF5.3m for the year to December 2020. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CHF1.0m.

For comparison, other companies in the same industry with market capitalizations ranging between CHF1.9b and CHF5.9b had a median total CEO compensation of CHF2.1m. This suggests that Greg Poux-Guillaume is paid more than the median for the industry. Moreover, Greg Poux-Guillaume also holds CHF6.2m worth of Sulzer stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	CHF1.0m	CHF1.0m	19%
Other	CHF4.3m	CHF4.5m	81%
Total Compensation	CHF5.3m	CHF5.5m	100%

Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. It's interesting to note that Sulzer allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Sulzer Ltd's Growth Numbers

Over the last three years, Sulzer Ltd has not seen its earnings per share change much, though there is a slight positive movement. It saw its revenue drop 11% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. 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 Sulzer Ltd Been A Good Investment?

Sulzer Ltd has generated a total shareholder return of 21% over three years, so most shareholders would 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...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 4 warning signs for Sulzer that investors should be aware of in a dynamic business environment.

Important note: Sulzer is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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