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Sims Limited's (ASX:SGM) CEO Compensation Is Looking A Bit Stretched At The Moment

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Under the guidance of CEO Alistair Field, Sims Limited (ASX:SGM) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 09 November 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Sims

Comparing Sims Limited's CEO Compensation With the industry

According to our data, Sims Limited has a market capitalization of AU$2.8b, and paid its CEO total annual compensation worth AU$7.9m over the year to June 2021. Notably, that's an increase of 87% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.7m.

For comparison, other companies in the same industry with market capitalizations ranging between AU$1.3b and AU$4.3b had a median total CEO compensation of AU$1.5m. This suggests that Alistair Field is paid more than the median for the industry. Furthermore, Alistair Field directly owns AU$3.3m worth of shares in the company.

Component

2021

2020

Proportion (2021)

Salary

AU$1.7m

AU$1.8m

22%

Other

AU$6.2m

AU$2.5m

78%

Total Compensation

AU$7.9m

AU$4.2m

100%

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. Sims 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.

ceo-compensation
ceo-compensation

A Look at Sims Limited's Growth Numbers

Over the past three years, Sims Limited has seen its earnings per share (EPS) grow by 4.7% per year. It achieved revenue growth of 21% over the last year.

This revenue growth could really point to a brighter future. And the improvement in EPSis modest but respectable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 Sims Limited Been A Good Investment?

Sims Limited has served shareholders reasonably well, with a total return of 18% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which can't be ignored) in Sims we think you should know about.

Important note: Sims 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.