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Jonathan Murphy has been the CEO of Assura Plc (LON:AGR) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Assura Plc's CEO Compensation With the industry
At the time of writing, our data shows that Assura Plc has a market capitalization of UK£2.1b, and reported total annual CEO compensation of UK£1.1m for the year to March 2020. That's a notable increase of 42% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£395k.
On comparing similar companies from the same industry with market caps ranging from UK£1.6b to UK£5.1b, we found that the median CEO total compensation was UK£1.3m. From this we gather that Jonathan Murphy is paid around the median for CEOs in the industry. Moreover, Jonathan Murphy also holds UK£1.7m worth of Assura stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 39% of total compensation represents salary and 61% is other remuneration. It's interesting to note that Assura 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.
A Look at Assura Plc's Growth Numbers
Over the last three years, Assura Plc has shrunk its earnings per share by 17% per year. It achieved revenue growth of 8.9% over the last year.
The decline in earnings is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Assura Plc Been A Good Investment?
Most shareholders would probably be pleased with Assura Plc for providing a total return of 41% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, Assura Plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good when you see that earnings growth over the last three years has been negative. On the other hand, shareholder returns are showing positive trends over the same time frame. We wouldn't say CEO compensation is too high, but shrinking EPS is undoubtedly an issue that will have to be addressed.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Assura (1 doesn't sit too well with us!) that you should be aware of before investing here.
Switching gears from Assura, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. 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.
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