Stem, Inc.'s (NYSE:STEM) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Stem to hold its Annual General Meeting on 29th of May
• CEO John Carrington's total compensation includes salary of US$550.6k
• The total compensation is 157% higher than the average for the industry
• Over the past three years, Stem's EPS grew by 69% and over the past three years, the total loss to shareholders 95%

In the past three years, the share price of Stem, Inc. (NYSE:STEM) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29th of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Stem

Comparing Stem, Inc.'s CEO Compensation With The Industry

According to our data, Stem, Inc. has a market capitalization of US$200m, and paid its CEO total annual compensation worth US$3.9m over the year to December 2023. We note that's an increase of 24% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$551k.

On comparing similar companies from the American Electrical industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$1.5m. Accordingly, our analysis reveals that Stem, Inc. pays John Carrington north of the industry median. Furthermore, John Carrington directly owns US$689k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	US$551k	US$550k	14%
Other	US$3.3m	US$2.6m	86%
Total Compensation	US$3.9m	US$3.1m	100%

On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. Stem pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Stem, Inc.'s Growth

Stem, Inc.'s earnings per share (EPS) grew 69% per year over the last three years. It achieved revenue growth of 7.8% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Stem, Inc. Been A Good Investment?

With a total shareholder return of -95% over three years, Stem, Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 5 warning signs for Stem that you should be aware of before investing.

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. 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.