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Is Clarkson PLC (LON:CKN) Excessively Paying Its CEO?

Simply Wall St

Andi Case became the CEO of Clarkson PLC (LON:CKN) in 2008. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Clarkson

How Does Andi Case's Compensation Compare With Similar Sized Companies?

According to our data, Clarkson PLC has a market capitalization of UK£885m, and paid its CEO total annual compensation worth UK£2.8m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£550k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from UK£306m to UK£1.2b, we found the median CEO total compensation was UK£881k.

Thus we can conclude that Andi Case receives more in total compensation than the median of a group of companies in the same market, and of similar size to Clarkson PLC. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

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

LSE:CKN CEO Compensation, January 11th 2020

Is Clarkson PLC Growing?

Clarkson PLC has reduced its earnings per share by an average of 4.5% a year, over the last three years (measured with a line of best fit). Its revenue is up 10% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Clarkson PLC Been A Good Investment?

Boasting a total shareholder return of 43% over three years, Clarkson PLC has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared total CEO remuneration at Clarkson PLC with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years. On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Clarkson (free visualization of insider trades).

If you want to buy a stock that is better than Clarkson, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.