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Does Mitie Group plc's (LON:MTO) CEO Pay Reflect Performance?

Simply Wall St

Phil Bentley has been the CEO of Mitie Group plc (LON:MTO) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Mitie Group

How Does Phil Bentley's Compensation Compare With Similar Sized Companies?

Our data indicates that Mitie Group plc is worth UK£601m, and total annual CEO compensation is UK£2.2m. (This number is for the twelve months until March 2019). Notably, that's an increase of 104% over the year before. While we always look at total compensation first, we note that the salary component is less, at UK£900k. We examined companies with market caps from UK£330m to UK£1.3b, and discovered that the median CEO total compensation of that group was UK£925k.

Thus we can conclude that Phil Bentley receives more in total compensation than the median of a group of companies in the same market, and of similar size to Mitie Group plc. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

LSE:MTO CEO Compensation, August 2nd 2019

Is Mitie Group plc Growing?

Mitie Group plc has reduced its earnings per share by an average of 47% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 9.4%.

Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Mitie Group plc Been A Good Investment?

Since shareholders would have lost about 29% over three years, some Mitie Group plc shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Mitie Group plc with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Over the same period, investors would have come away with nothing in the way of share price gains. This contrasts with the growth in CEO remuneration, year on year. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Mitie Group.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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.