Here's Why DS Smith Plc's (LON:SMDS) CEO May Not Expect A Pay Rise This Year

By
Simply Wall St
Published
August 31, 2021
LSE:SMDS
Source: Shutterstock

Performance at DS Smith Plc (LON:SMDS) has not been particularly rosy recently and shareholders will likely be holding CEO Miles Roberts and the board accountable for this. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 07 September 2021. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

See our latest analysis for DS Smith

Comparing DS Smith Plc's CEO Compensation With the industry

Our data indicates that DS Smith Plc has a market capitalization of UK£6.1b, and total annual CEO compensation was reported as UK£2.5m for the year to April 2021. Notably, that's an increase of 78% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£786k.

On comparing similar companies from the same industry with market caps ranging from UK£2.9b to UK£8.7b, we found that the median CEO total compensation was UK£3.8m. This suggests that Miles Roberts is paid below the industry median. Moreover, Miles Roberts also holds UK£9.4m worth of DS Smith stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary UK£786k UK£778k 31%
Other UK£1.7m UK£644k 69%
Total CompensationUK£2.5m UK£1.4m100%

Talking in terms of the industry, salary represented approximately 73% of total compensation out of all the companies we analyzed, while other remuneration made up 27% of the pie. In DS Smith'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.

ceo-compensation
LSE:SMDS CEO Compensation September 1st 2021

A Look at DS Smith Plc's Growth Numbers

DS Smith Plc has reduced its earnings per share by 17% a year over the last three years. Its revenue is down 1.1% over the previous 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has DS Smith Plc Been A Good Investment?

With a three year total loss of 3.2% for the shareholders, DS Smith Plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 DS Smith that investors should be aware of in a dynamic business environment.

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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