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

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·3 min read
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Under the guidance of CEO Jeff Martin, Sempra Energy (NYSE:SRE) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 14 May 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for Sempra Energy

Comparing Sempra Energy's CEO Compensation With the industry

Our data indicates that Sempra Energy has a market capitalization of US$42b, and total annual CEO compensation was reported as US$23m for the year to December 2020. That's a notable increase of 17% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.3m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$10m. Accordingly, our analysis reveals that Sempra Energy pays Jeff Martin north of the industry median. Moreover, Jeff Martin also holds US$5.1m worth of Sempra Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2019

Proportion (2020)

Salary

US$1.3m

US$1.2m

6%

Other

US$22m

US$19m

94%

Total Compensation

US$23m

US$20m

100%

On an industry level, around 13% of total compensation represents salary and 87% is other remuneration. It's interesting to note that Sempra Energy allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

Sempra Energy's Growth

Sempra Energy has seen its earnings per share (EPS) increase by 139% a year over the past three years. It achieved revenue growth of 5.8% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Sempra Energy Been A Good Investment?

Most shareholders would probably be pleased with Sempra Energy for providing a total return of 42% over three years. 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...

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, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is significant) in Sempra Energy we think you should know about.

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.

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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