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Tim Carroll has been the CEO of Focusrite plc (LON:TUNE) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Focusrite.
How Does Total Compensation For Tim Carroll Compare With Other Companies In The Industry?
Our data indicates that Focusrite plc has a market capitalization of UK£573m, and total annual CEO compensation was reported as UK£667k for the year to August 2020. We note that's an increase of 43% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£285k.
On examining similar-sized companies in the industry with market capitalizations between UK£293m and UK£1.2b, we discovered that the median CEO total compensation of that group was UK£861k. This suggests that Focusrite remunerates its CEO largely in line with the industry average. What's more, Tim Carroll holds UK£420k worth of shares in the company in their own name.
On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Focusrite pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Focusrite plc's Growth Numbers
Focusrite plc has reduced its earnings per share by 23% a year over the last three years. Its revenue is up 54% over the last year.
The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Focusrite plc Been A Good Investment?
We think that the total shareholder return of 175%, over three years, would leave most Focusrite plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we touched on above, Focusrite 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. Investors will be happy that Focusrite has produced strong shareholder returns for the past three years. At the same time, revenues are also moving northwards at a healthy pace. On a worrying note, its important to acknowledge that EPS growth has been negative recently. Considering overall performance, it's fair to say Tim is paid reasonably.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Focusrite that investors should look into moving forward.
Switching gears from Focusrite, 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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