Shareholders May Not Be So Generous With SM Energy Company's (NYSE:SM) CEO Compensation And Here's Why

Key Insights

• SM Energy's Annual General Meeting to take place on 22nd of May
• CEO Herb Vogel's total compensation includes salary of US$854.0k
• The total compensation is 77% higher than the average for the industry
• Over the past three years, SM Energy's EPS grew by 37% and over the past three years, the total loss to shareholders 27%

Our free stock report includes 5 warning signs investors should be aware of before investing in SM Energy. Read for free now.

Shareholders of SM Energy Company (NYSE:SM) will have been dismayed by the negative share price return over the last three years. 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 22nd of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for SM Energy

Comparing SM Energy Company's CEO Compensation With The Industry

At the time of writing, our data shows that SM Energy Company has a market capitalization of US$2.9b, and reported total annual CEO compensation of US$12m for the year to December 2024. That's a notable increase of 11% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$854k.

In comparison with other companies in the American Oil and Gas industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$6.9m. Hence, we can conclude that Herb Vogel is remunerated higher than the industry median. What's more, Herb Vogel holds US$12m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. SM Energy sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

SM Energy Company's Growth

SM Energy Company's earnings per share (EPS) grew 37% per year over the last three years. In the last year, its revenue is up 25%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 SM Energy Company Been A Good Investment?

Since shareholders would have lost about 27% over three years, some SM Energy Company investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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 is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 5 warning signs for SM Energy (of which 2 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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.