Despite positive share price growth of 7.9% for Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 28 June 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
How Does Total Compensation For Chris Ripley Compare With Other Companies In The Industry?
According to our data, Sinclair Broadcast Group, Inc. has a market capitalization of US$2.5b, and paid its CEO total annual compensation worth US$13m over the year to December 2020. We note that's an increase of 29% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.4m.
In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$6.1m. This suggests that Chris Ripley is paid more than the median for the industry. Furthermore, Chris Ripley directly owns US$14m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 22% of total compensation out of all the companies we analyzed, while other remuneration made up 78% of the pie. Sinclair Broadcast Group 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.
A Look at Sinclair Broadcast Group, Inc.'s Growth Numbers
Over the last three years, Sinclair Broadcast Group, Inc. has shrunk its earnings per share by 124% per year. Its revenue is up 14% over the last year.
Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Sinclair Broadcast Group, Inc. Been A Good Investment?
Sinclair Broadcast Group, Inc. has not done too badly by shareholders, with a total return of 7.9%, over three years. It would be nice to see that metric improve in the future. 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.
While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Sinclair Broadcast Group you should be aware of, and 2 of them are a bit unpleasant.
Switching gears from Sinclair Broadcast Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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