Some Shareholders May find It Hard To Increase Severn Trent PLC's (LON:SVT) CEO Compensation This Year

Key Insights

• Severn Trent to hold its Annual General Meeting on 11th of July
• Total pay for CEO Liv Garfield includes UK£793.8k salary
• The overall pay is comparable to the industry average
• Severn Trent's total shareholder return over the past three years was 4.8% while its EPS was down 19% over the past three years

The anaemic share price growth at Severn Trent PLC (LON:SVT) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. The upcoming AGM on 11th of July may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. 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 Severn Trent

Comparing Severn Trent PLC's CEO Compensation With The Industry

At the time of writing, our data shows that Severn Trent PLC has a market capitalization of UK£7.3b, and reported total annual CEO compensation of UK£3.2m for the year to March 2024. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£794k.

On examining similar-sized companies in the the United Kingdom Water Utilities industry with market capitalizations between UK£3.1b and UK£9.4b, we discovered that the median CEO total compensation of that group was UK£3.2m. This suggests that Severn Trent remunerates its CEO largely in line with the industry average. Moreover, Liv Garfield also holds UK£9.4m worth of Severn Trent stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	UK£794k	UK£772k	25%
Other	UK£2.4m	UK£2.4m	75%
Total Compensation	UK£3.2m	UK£3.2m	100%

Talking in terms of the industry, salary represented approximately 64% of total compensation out of all the companies we analyzed, while other remuneration made up 36% of the pie. In Severn Trent's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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 Severn Trent PLC's Growth Numbers

Severn Trent PLC has reduced its earnings per share by 19% a year over the last three years. Its revenue is up 8.0% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Severn Trent PLC Been A Good Investment?

Severn Trent PLC has generated a total shareholder return of 4.8% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

The flat share price growth combined with the the fact that earnings have failed to grow makes us wonder whether the share price will have any further strong momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Severn Trent you should be aware of, and 2 of them don't sit too well with us.

Switching gears from Severn Trent, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com