In 1999 Drew Nelson was appointed CEO of IQE plc (LON:IQE). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Drew Nelson’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that IQE plc has a market cap of UK£654m, and is paying total annual CEO compensation of UK£1m. We note that’s an increase of 25% above last year. When we examined a selection of companies with market caps ranging from UK£312m to UK£1.2b, we found the median CEO compensation was UK£412k.
Thus we can conclude that Drew Nelson receives more in total compensation than the median of a group of companies in the same market, and of similar size to IQE plc. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at IQE has changed over time.
Is IQE plc Growing?
Over the last three years IQE plc has shrunk its earnings per share by an average of 14% per year. In the last year, its revenue is up 12%.
Sadly for shareholders, earnings per share are actually down, over three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth wto overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
You might want to check this free visual report on analyst forecasts for future earnings.
Has IQE plc Been A Good Investment?
I think that the total shareholder return of 235%, over three years, would leave most IQE plc shareholders smiling. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by IQE plc, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that 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. Considering this, shareholders are probably not too worried about the CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling IQE plc (free visualization of insider trades).
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.