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Is The Go-Ahead Group plc's (LON:GOG) CEO Pay Fair?

Simply Wall St

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In 2011 David Brown was appointed CEO of The Go-Ahead Group plc (LON:GOG). 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Go-Ahead Group

How Does David Brown's Compensation Compare With Similar Sized Companies?

Our data indicates that The Go-Ahead Group plc is worth UK£853m, and total annual CEO compensation is UK£1.2m. (This figure is for the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at UK£556k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£306m to UK£1.2b. The median total CEO compensation was UK£831k.

As you can see, David Brown is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean The Go-Ahead Group plc is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Go-Ahead Group has changed from year to year.

LSE:GOG CEO Compensation, April 5th 2019

Is The Go-Ahead Group plc Growing?

Over the last three years The Go-Ahead Group plc has shrunk its earnings per share by an average of 1.9% per year (measured with a line of best fit). It saw its revenue drop -1.2% over the last year.

In the last three years the company has failed to grow earnings per s. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has The Go-Ahead Group plc Been A Good Investment?

Since shareholders would have lost about 11% over three years, some The Go-Ahead Group plc shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We examined the amount The Go-Ahead Group plc pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Go-Ahead Group 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.

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.