We Think Shareholders Are Less Likely To Approve A Large Pay Rise For GSK plc's (LON:GSK) CEO For Now

Key Insights

• GSK to hold its Annual General Meeting on 8th of May
• Salary of UK£1.31m is part of CEO Emma Walmsley's total remuneration
• The total compensation is 41% higher than the average for the industry
• Over the past three years, GSK's EPS fell by 4.2% and over the past three years, the total shareholder return was 44%

Despite strong share price growth of 44% for GSK plc (LON:GSK) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 8th of May. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for GSK

How Does Total Compensation For Emma Walmsley Compare With Other Companies In The Industry?

At the time of writing, our data shows that GSK plc has a market capitalization of UK£70b, and reported total annual CEO compensation of UK£13m for the year to December 2023. We note that's an increase of 50% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£1.3m.

On comparing similar companies in the British Pharmaceuticals industry with market capitalizations above UK£6.4b, we found that the median total CEO compensation was UK£9.0m. This suggests that Emma Walmsley is paid more than the median for the industry. Furthermore, Emma Walmsley directly owns UK£34m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	UK£1.3m	UK£1.3m	10%
Other	UK£11m	UK£7.2m	90%
Total Compensation	UK£13m	UK£8.5m	100%

On an industry level, around 81% of total compensation represents salary and 19% is other remuneration. GSK sets aside a smaller share of compensation for salary, in comparison to the overall 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 GSK plc's Growth Numbers

Over the last three years, GSK plc has shrunk its earnings per share by 4.2% per year. It achieved revenue growth of 5.7% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has GSK plc Been A Good Investment?

Boasting a total shareholder return of 44% over three years, GSK plc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

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 3 warning signs for GSK that investors should be aware of in a dynamic business environment.

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.