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Is ADVFN plc (LON:AFN) Excessively Paying Its CEO?

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Simply Wall St
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The CEO of ADVFN plc (LON:AFN) is Clem Chambers. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for ADVFN

How Does Clem Chambers's Compensation Compare With Similar Sized Companies?

Our data indicates that ADVFN plc is worth UK£7.3m, and total annual CEO compensation is UK£395k. (This is based on the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at UK£349k. We examined a group of similar sized companies, with market capitalizations of below UK£165m. The median CEO total compensation in that group is UK£252k.

As you can see, Clem Chambers is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean ADVFN plc is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at ADVFN has changed from year to year.

AIM:AFN CEO Compensation, August 5th 2019
AIM:AFN CEO Compensation, August 5th 2019

Is ADVFN plc Growing?

Over the last three years ADVFN plc has grown its earnings per share (EPS) by an average of 120% per year (using a line of best fit). Its revenue is up 6.3% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has ADVFN plc Been A Good Investment?

ADVFN plc has served shareholders reasonably well, with a total return of 12% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared total CEO remuneration at ADVFN plc with the amount paid at companies with a similar market capitalization. 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. We also note that, over the same time frame, shareholder returns haven't been bad. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. So you may want to check if insiders are buying ADVFN shares with their own money (free access).

Important note: ADVFN 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.