Does Essentra plc's (LON:ESNT) CEO Pay Matter?
In 2017 Paul Forman was appointed CEO of Essentra plc (LON:ESNT). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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.
Check out our latest analysis for Essentra
How Does Paul Forman's Compensation Compare With Similar Sized Companies?
According to our data, Essentra plc has a market capitalization of UK£1.1b, and paid its CEO total annual compensation worth UK£1.4m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at UK£625k. We looked at a group of companies with market capitalizations from UK£776m to UK£2.5b, and the median CEO total compensation was UK£1.4m.
So Paul Forman is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Essentra has changed from year to year.
Is Essentra plc Growing?
Essentra plc has increased its earnings per share (EPS) by an average of 61% a year, over the last three years (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.
Has Essentra plc Been A Good Investment?
Given the total loss of 2.3% over three years, many shareholders in Essentra plc are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Remuneration for Paul Forman is close enough to the median pay for a CEO of a similar sized company .
We think that the EPS growth is very pleasing, but it's disappointing to see negative shareholder returns over three years. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Essentra (free visualization of insider trades).
Important note: Essentra 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.
