Key Insights

• Gates Industrial's Annual General Meeting to take place on 20th of June
• Total pay for CEO Ivo Jurek includes US$1.13m salary
• The overall pay is 52% above the industry average
• Over the past three years, Gates Industrial's EPS grew by 35% and over the past three years, the total loss to shareholders 4.1%

In the past three years, the share price of Gates Industrial Corporation plc (NYSE:GTES) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 20th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Comparing Gates Industrial Corporation plc's CEO Compensation With The Industry

Our data indicates that Gates Industrial Corporation plc has a market capitalization of US$4.3b, and total annual CEO compensation was reported as US$9.7m for the year to December 2023. Notably, that's a decrease of 33% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.

On examining similar-sized companies in the American Machinery industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$6.4m. Accordingly, our analysis reveals that Gates Industrial Corporation plc pays Ivo Jurek north of the industry median. What's more, Ivo Jurek holds US$12m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Gates Industrial 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.

Gates Industrial Corporation plc's Growth

Gates Industrial Corporation plc has seen its earnings per share (EPS) increase by 35% a year over the past three years. In the last year, its revenue changed by just 0.7%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Gates Industrial Corporation plc Been A Good Investment?

With a three year total loss of 4.1% for the shareholders, Gates Industrial Corporation plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Gates Industrial that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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