Here's Why Shareholders May Want To Be Cautious With Increasing Sempra's (NYSE:SRE) CEO Pay Packet

Key Insights

• Sempra to hold its Annual General Meeting on 13th of May
• Salary of US$1.60m is part of CEO Jeff Martin's total remuneration
• The total compensation is 72% higher than the average for the industry
• Over the past three years, Sempra's EPS grew by 29% and over the past three years, the total shareholder return was 2.3%

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Under the guidance of CEO Jeff Martin, Sempra (NYSE:SRE) has performed reasonably well recently. As shareholders go into the upcoming AGM on 13th of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still want to keep CEO compensation within reason.

View our latest analysis for Sempra

Comparing Sempra's CEO Compensation With The Industry

According to our data, Sempra has a market capitalization of US$49b, and paid its CEO total annual compensation worth US$22m over the year to December 2024. That's a notable decrease of 22% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.6m.

On comparing similar companies in the American Integrated Utilities industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. Hence, we can conclude that Jeff Martin is remunerated higher than the industry median. Furthermore, Jeff Martin directly owns US$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 11% of total compensation represents salary, while the remainder of 89% is other remuneration. Sempra sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Sempra's Growth Numbers

Over the past three years, Sempra has seen its earnings per share (EPS) grow by 29% per year. In the last year, its revenue is down 21%.

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 Sempra Been A Good Investment?

With a total shareholder return of 2.3% over three years, Sempra has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Sempra (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

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.