R. Smith became the CEO of 1pm plc (LON:OPM) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does R. Smith's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that 1pm plc has a market cap of UK£26m, and reported total annual CEO compensation of UK£371k for the year to May 2018. While we always look at total compensation first, we note that the salary component is less, at UK£200k. We looked at a group of companies with market capitalizations under UK£162m, and the median CEO total compensation was UK£257k.
As you can see, R. Smith is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean 1pm plc is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at 1pm has changed over time.
Is 1pm plc Growing?
1pm plc has increased its earnings per share (EPS) by an average of 11% a year, over the last three years (using a line of best fit). Its revenue is up 5.9% over last year.
This demonstrates that the company has been improving recently. A good result. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.
Has 1pm plc Been A Good Investment?
Since shareholders would have lost about 56% over three years, some 1pm plc shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount 1pm plc pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling 1pm shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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