Increases to CEO Compensation Might Be Put On Hold For Now at Gates Industrial Corporation plc (NYSE:GTES)

Key Insights

• Gates Industrial to hold its Annual General Meeting on 20th of June
• Salary of US$1.13m is part of CEO Ivo Jurek's total remuneration
• Total compensation is 52% above industry average
• Over the past three years, Gates Industrial's EPS grew by 35% and over the past three years, the total loss to shareholders 4.1%

In the past three years, shareholders of Gates Industrial Corporation plc (NYSE:GTES) have seen a loss on their investment. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 20th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Gates Industrial

Comparing Gates Industrial Corporation plc's CEO Compensation With The Industry

At the time of writing, our data shows that Gates Industrial Corporation plc has a market capitalization of US$4.3b, and reported total annual CEO compensation of US$9.7m for the year to December 2023. We note that's a decrease of 33% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.

In comparison with other companies in the American Machinery industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$6.4m. Hence, we can conclude that Ivo Jurek is remunerated higher than the industry median. Furthermore, Ivo Jurek directly owns US$12m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.1m	US$1.1m	12%
Other	US$8.6m	US$13m	88%
Total Compensation	US$9.7m	US$14m	100%

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Gates Industrial pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Gates Industrial Corporation plc's Growth

Gates Industrial Corporation plc has seen its earnings per share (EPS) increase by 35% a year over the past three years. Revenue was pretty flat on last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Gates Industrial Corporation plc Been A Good Investment?

Given the total shareholder loss of 4.1% over three years, many shareholders in Gates Industrial Corporation plc are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Gates Industrial that investors should look into moving forward.

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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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