How Much is Severn Trent's (LON:SVT) CEO Getting Paid?

This article will reflect on the compensation paid to Liv Garfield who has served as CEO of Severn Trent Plc (LON:SVT) since 2014. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Severn Trent.

Check out our latest analysis for Severn Trent

How Does Total Compensation For Liv Garfield Compare With Other Companies In The Industry?

According to our data, Severn Trent Plc has a market capitalization of UK£5.7b, and paid its CEO total annual compensation worth UK£2.7m over the year to March 2020. Notably, that's an increase of 10% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£721k.

On comparing similar companies from the same industry with market caps ranging from UK£2.9b to UK£8.8b, we found that the median CEO total compensation was UK£2.1m. This suggests that Severn Trent remunerates its CEO largely in line with the industry average. What's more, Liv Garfield holds UK£5.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. Severn Trent 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.

Severn Trent Plc's Growth

Over the last three years, Severn Trent Plc has shrunk its earnings per share by 27% per year. Its revenue is up 1.0% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in 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 Severn Trent Plc Been A Good Investment?

We think that the total shareholder return of 39%, over three years, would leave most Severn Trent Plc 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...

As we noted earlier, Severn Trent pays its CEO in line with similar-sized companies belonging to the same industry. Some investors may take issue with this, especially considering shrinking EPS for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We're not saying CEO compensation is too generous, but shrinking EPS is undoubtedly an issue that will have to be addressed.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Severn Trent (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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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