Does National Grid plc's (LON:NG.) CEO Salary Reflect Performance?
John Pettigrew became the CEO of National Grid plc (LON:NG.) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for National Grid
How Does John Pettigrew's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that National Grid plc has a market cap of UK£31b, and reported total annual CEO compensation of UK£4.6m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at UK£944k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over UK£6.3b, and calculated the median CEO total compensation to be UK£3.7m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
So John Pettigrew receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see, below, how CEO compensation at National Grid has changed over time.
Is National Grid plc Growing?
On average over the last three years, National Grid plc has grown earnings per share (EPS) by 17% each year (using a line of best fit). It saw its revenue drop 2.1% over the last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has National Grid plc Been A Good Investment?
Since shareholders would have lost about 2.1% over three years, some National Grid plc shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Remuneration for John Pettigrew is close enough to the median pay for a CEO of a large company .
We'd say the company can boast of its EPS growth, but we find the returns over the last three years to be lacking. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at National Grid.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
