Key Insights

• SJW Group's Annual General Meeting to take place on 20th of June
• Total pay for CEO Eric Thornburg includes US$874.0k salary
• Total compensation is 1,441% above industry average
• Over the past three years, SJW Group's EPS grew by 7.0% and over the past three years, the total loss to shareholders 17%

The underwhelming share price performance of SJW Group (NYSE:SJW) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 20th of June could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

How Does Total Compensation For Eric Thornburg Compare With Other Companies In The Industry?

At the time of writing, our data shows that SJW Group has a market capitalization of US$1.7b, and reported total annual CEO compensation of US$4.2m for the year to December 2023. Notably, that's an increase of 32% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$874k.

On examining similar-sized companies in the American Water Utilities industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$273k. This suggests that Eric Thornburg is paid more than the median for the industry. What's more, Eric Thornburg holds US$2.4m worth of shares in the company in their own name.

On an industry level, around 38% of total compensation represents salary and 62% is other remuneration. It's interesting to note that SJW Group allocates a smaller portion of compensation to salary 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.

SJW Group's Growth

SJW Group has seen its earnings per share (EPS) increase by 7.0% a year over the past three years. Its revenue is up 7.7% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. 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 SJW Group Been A Good Investment?

Since shareholders would have lost about 17% over three years, some SJW Group investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for SJW Group (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: SJW 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.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com