Yahoo Finance How Should Investors Feel About Sumo Group's (LON:SUMO) CEO Remuneration?
The CEO of Sumo Group Plc (LON:SUMO) is Carl Cavers, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Sumo Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Sumo Group
How Does Total Compensation For Carl Cavers Compare With Other Companies In The Industry?
According to our data, Sumo Group Plc has a market capitalization of UK£565m, and paid its CEO total annual compensation worth UK£468k over the year to December 2019. That's just a smallish increase of 4.0% on last year. In particular, the salary of UK£263.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from UK£300m to UK£1.2b, we found that the median CEO total compensation was UK£685k. Accordingly, Sumo Group pays its CEO under the industry median. Furthermore, Carl Cavers directly owns UK£16m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | UK£263k | UK£240k | 56% |
Other | UK£205k | UK£210k | 44% |
Total Compensation | UK£468k | UK£450k | 100% |
Speaking on an industry level, nearly 85% of total compensation represents salary, while the remainder of 15% is other remuneration. It's interesting to note that Sumo Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Sumo Group Plc's Growth Numbers
Over the past three years, Sumo Group Plc has seen its earnings per share (EPS) grow by 198% per year. In the last year, its revenue is up 36%.
Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Sumo Group Plc Been A Good Investment?
Most shareholders would probably be pleased with Sumo Group Plc for providing a total return of 194% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As we noted earlier, Sumo Group pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Sumo Group that investors should think about before committing capital to this stock.
Important note: Sumo Group 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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