How Should Investors Feel About Southern Copper's (NYSE:SCCO) CEO Remuneration?

Simply Wall St
December 28, 2020

This article will reflect on the compensation paid to Oscar González Rocha who has served as CEO of Southern Copper Corporation (NYSE:SCCO) since 2004. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Southern Copper.

View our latest analysis for Southern Copper

How Does Total Compensation For Oscar González Rocha Compare With Other Companies In The Industry?

At the time of writing, our data shows that Southern Copper Corporation has a market capitalization of US$50b, and reported total annual CEO compensation of US$1.6m for the year to December 2019. We note that's an increase of 9.0% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$490k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$7.3m. This suggests that Oscar González Rocha is paid below the industry median. What's more, Oscar González Rocha holds US$8.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$490k US$490k 30%
Other US$1.1m US$1.0m 70%
Total CompensationUS$1.6m US$1.5m100%

Talking in terms of the industry, salary represented approximately 36% of total compensation out of all the companies we analyzed, while other remuneration made up 64% of the pie. Southern Copper 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.

NYSE:SCCO CEO Compensation December 28th 2020

A Look at Southern Copper Corporation's Growth Numbers

Over the past three years, Southern Copper Corporation has seen its earnings per share (EPS) grow by 2.7% per year. It achieved revenue growth of 5.1% over the last year.

We'd prefer higher revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Southern Copper Corporation Been A Good Investment?

We think that the total shareholder return of 53%, over three years, would leave most Southern Copper Corporation shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

As we touched on above, Southern Copper Corporation is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In contrast, shareholder returns have been excellent over the past three years, and that’s certainly a promising trend to keep an eye on. So, considering these tasty returns, CEO compensation seems quite appropriate.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 4 warning signs for Southern Copper that investors should be aware of in a dynamic business environment.

Important note: Southern Copper is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. 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.
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