Mike Renna became the CEO of South Jersey Industries, Inc. (NYSE:SJI) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Mike Renna Compare With Other Companies In The Industry?
According to our data, South Jersey Industries, Inc. has a market capitalization of US$2.0b, and paid its CEO total annual compensation worth US$6.3m over the year to December 2019. Notably, that's an increase of 36% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$764k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$4.3m. Accordingly, our analysis reveals that South Jersey Industries, Inc. pays Mike Renna north of the industry median. Moreover, Mike Renna also holds US$2.4m worth of South Jersey Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 18% of total compensation represents salary and 82% is other remuneration. In South Jersey Industries' case, non-salary compensation represents a greater slice of total remuneration, 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.
South Jersey Industries, Inc.'s Growth
Over the past three years, South Jersey Industries, Inc. has seen its earnings per share (EPS) grow by 1.1% per year. In the last year, its revenue is down 15%.
We generally like to see a little revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has South Jersey Industries, Inc. Been A Good Investment?
Given the total shareholder loss of 33% over three years, many shareholders in South Jersey Industries, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, South Jersey Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. The growth in the business has been uninspiring, but the shareholder returns for South Jersey Industries have arguably been worse, over the last three years. This doesn't look good when you see that Mike is earning more than the industry median. Taking all this into account, it could be hard to get shareholder support for giving Mike a raise.
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 4 warning signs for South Jersey Industries (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
Important note: South Jersey Industries 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. 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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