This Is Why Shareholders Will Hold Back On A Pay Rise For CMS Energy Corporation's (NYSE:CMS) CEO This Year

Key Insights

• CMS Energy will host its Annual General Meeting on 3rd of May
• Salary of US$1.24m is part of CEO Garrick Rochow's total remuneration
• The total compensation is similar to the average for the industry
• CMS Energy's total shareholder return over the past three years was 1.0% while its EPS grew by 5.5% over the past three years

CEO Garrick Rochow has done a decent job of delivering relatively good performance at CMS Energy Corporation (NYSE:CMS) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 3rd of May. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for CMS Energy

How Does Total Compensation For Garrick Rochow Compare With Other Companies In The Industry?

According to our data, CMS Energy Corporation has a market capitalization of US$18b, and paid its CEO total annual compensation worth US$9.6m over the year to December 2023. Notably, that's an increase of 11% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.

For comparison, other companies in the American Integrated Utilities industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$9.6m. From this we gather that Garrick Rochow is paid around the median for CEOs in the industry. What's more, Garrick Rochow holds US$27m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.2m	US$1.2m	13%
Other	US$8.4m	US$7.6m	87%
Total Compensation	US$9.6m	US$8.7m	100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Although there is a difference in how total compensation is set, CMS Energy more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at CMS Energy Corporation's Growth Numbers

CMS Energy Corporation's earnings per share (EPS) grew 5.5% per year over the last three years. It saw its revenue drop 14% 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. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 CMS Energy Corporation Been A Good Investment?

With a total shareholder return of 1.0% over three years, CMS Energy Corporation has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

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. In our study, we found 3 warning signs for CMS Energy you should be aware of, and 1 of them shouldn't be ignored.

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.