Shareholders Will Probably Not Have Any Issues With Washington H. Soul Pattinson and Company Limited's (ASX:SOL) CEO Compensation

editorial-team@simplywallst.com (Simply Wall St)

Thu, Nov 30, 2023, 8:27 PM 4 min read

Washington H. Soul Pattinson's Annual General Meeting to take place on 8th of December
Salary of AU$1.57m is part of CEO Todd Barlow's total remuneration
The overall pay is comparable to the industry average
Washington H. Soul Pattinson's total shareholder return over the past three years was 26% while its EPS was down 21% over the past three years

Despite positive share price growth of 26% for Washington H. Soul Pattinson and Company Limited (ASX:SOL) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 8th of December. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Washington H. Soul Pattinson

How Does Total Compensation For Todd Barlow Compare With Other Companies In The Industry?

According to our data, Washington H. Soul Pattinson and Company Limited has a market capitalization of AU$12b, and paid its CEO total annual compensation worth AU$6.0m over the year to July 2023. That's a notable increase of 67% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.6m.

In comparison with other companies in the Australian Diversified Financial industry with market capitalizations ranging from AU$6.1b to AU$18b, the reported median CEO total compensation was AU$6.0m. So it looks like Washington H. Soul Pattinson compensates Todd Barlow in line with the median for the industry. Furthermore, Todd Barlow directly owns AU$9.8m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$1.6m	AU$1.5m	26%
Other	AU$4.4m	AU$2.1m	74%
Total Compensation	AU$6.0m	AU$3.6m	100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. In Washington H. Soul Pattinson's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation — ASX:SOL CEO Compensation December 1st 2023

A Look at Washington H. Soul Pattinson and Company Limited's Growth Numbers

Over the last three years, Washington H. Soul Pattinson and Company Limited has shrunk its earnings per share by 21% per year. It saw its revenue drop 60% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Washington H. Soul Pattinson and Company Limited Been A Good Investment?

Washington H. Soul Pattinson and Company Limited has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Washington H. Soul Pattinson (free visualization of insider trades).

Switching gears from Washington H. Soul Pattinson, 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.

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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.