Yahoo Finance How Much Does SSE's (LON:SSE) CEO Make?
This article will reflect on the compensation paid to Alistair Phillips-Davies who has served as CEO of SSE plc (LON:SSE) since 2013. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for SSE
How Does Total Compensation For Alistair Phillips-Davies Compare With Other Companies In The Industry?
According to our data, SSE plc has a market capitalization of UK£13b, and paid its CEO total annual compensation worth UK£2.4m over the year to March 2020. Notably, that's an increase of 48% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£890k.
In comparison with other companies in the industry with market capitalizations over UK£6.1b , the reported median total CEO compensation was UK£1.9m. This suggests that SSE remunerates its CEO largely in line with the industry average. What's more, Alistair Phillips-Davies holds UK£1.3m worth of shares in the company in their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | UK£890k | UK£890k | 37% |
Other | UK£1.5m | UK£749k | 63% |
Total Compensation | UK£2.4m | UK£1.6m | 100% |
On an industry level, roughly 49% of total compensation represents salary and 51% is other remuneration. SSE 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 SSE plc's Growth Numbers
Over the last three years, SSE plc has shrunk its earnings per share by 36% per year. Its revenue is down 6.8% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 SSE plc Been A Good Investment?
SSE plc has generated a total shareholder return of 6.9% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
As we touched on above, SSE plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. According to our analysis, SSE is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. This doesn't compare well with CEO compensation, which is close to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for SSE you should be aware of, and 2 of them are potentially serious.
Important note: SSE 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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