The CEO Of Smurfit Kappa Group Plc (ISE:SK3) Might See A Pay Rise On The Horizon

Shareholders will be pleased by the robust performance of Smurfit Kappa Group Plc (ISE:SK3) recently and this will be kept in mind in the upcoming AGM on 30 April 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

View our latest analysis for Smurfit Kappa Group

How Does Total Compensation For Tony J. Smurfit Compare With Other Companies In The Industry?

At the time of writing, our data shows that Smurfit Kappa Group Plc has a market capitalization of €11b, and reported total annual CEO compensation of €5.3m for the year to December 2020. Notably, that's an increase of 43% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at €1.1m.

For comparison, other companies in the industry with market capitalizations above €6.6b, reported a median total CEO compensation of €8.4m. That is to say, Tony J. Smurfit is paid under the industry median. Moreover, Tony J. Smurfit also holds €55m worth of Smurfit Kappa Group 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	€1.1m	€1.1m	21%
Other	€4.2m	€2.6m	79%
Total Compensation	€5.3m	€3.7m	100%

On an industry level, around 62% of total compensation represents salary and 38% is other remuneration. It's interesting to note that Smurfit Kappa Group allocates a smaller portion of compensation to salary 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.

A Look at Smurfit Kappa Group Plc's Growth Numbers

Smurfit Kappa Group Plc's earnings per share (EPS) grew 8.8% per year over the last three years. It saw its revenue drop 5.7% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Smurfit Kappa Group Plc Been A Good Investment?

Smurfit Kappa Group Plc has generated a total shareholder return of 29% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 4 warning signs for Smurfit Kappa Group 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.

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