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Andrew Wass is the CEO of Gear4music (Holdings) plc (LON:G4M), and in this article, we analyze the executive's compensation package 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 Gear4music (Holdings) plc's CEO Compensation With the industry
According to our data, Gear4music (Holdings) plc has a market capitalization of UK£152m, and paid its CEO total annual compensation worth UK£119k over the year to March 2020. We note that's a decrease of 50% compared to last year. Notably, the salary which is UK£114.0k, represents most of the total compensation being paid.
On comparing similar companies from the same industry with market caps ranging from UK£76m to UK£305m, we found that the median CEO total compensation was UK£410k. Accordingly, Gear4music (Holdings) pays its CEO under the industry median. What's more, Andrew Wass holds UK£52m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. Investors will find it interesting that Gear4music (Holdings) pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Gear4music (Holdings) plc's Growth
Over the past three years, Gear4music (Holdings) plc has seen its earnings per share (EPS) grow by 2.5% per year. It achieved revenue growth of 10% over the last year.
We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. So while we'd stop just short of calling this a top performer, but we think it is well 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 Gear4music (Holdings) plc Been A Good Investment?
Since shareholders would have lost about 6.8% over three years, some Gear4music (Holdings) plc investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
Andrew receives almost all of their compensation through a salary. As we noted earlier, Gear4music (Holdings) pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But the company isn't growing and total shareholder returns have been disappointing. So while we would not say that Andrew is generously paid, it would be good to see an improvement in business performance before there is talk about a raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Gear4music (Holdings) that you should be aware of before investing.
Important note: Gear4music (Holdings) is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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