Yahoo Finance Is Severn Trent Plc's (LON:SVT) CEO Being Overpaid?
In 2014 Liv Garfield was appointed CEO of Severn Trent Plc (LON:SVT). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Severn Trent
How Does Liv Garfield's Compensation Compare With Similar Sized Companies?
Our data indicates that Severn Trent Plc is worth UK£6.0b, and total annual CEO compensation was reported as UK£2.4m for the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at UK£704k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from UK£3.1b to UK£9.3b, and the median CEO total compensation was UK£2.6m.
So Liv Garfield receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at Severn Trent, below.
Is Severn Trent Plc Growing?
Severn Trent Plc has reduced its earnings per share by an average of 5.7% a year, over the last three years (measured with a line of best fit). Its revenue is up 3.1% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Severn Trent Plc Been A Good Investment?
Severn Trent Plc has generated a total shareholder return of 28% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
Remuneration for Liv Garfield is close enough to the median pay for a CEO of a similar sized company .
We're not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We do not think the CEO pay is a problem, but it's probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. Shareholders may want to check for free if Severn Trent insiders are buying or selling shares.
Important note: Severn Trent may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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