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Ronnie George became the CEO of Volution Group plc (LON:FAN) in 2014, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Ronnie George Compare With Other Companies In The Industry?
At the time of writing, our data shows that Volution Group plc has a market capitalization of UK£470m, and reported total annual CEO compensation of UK£606k for the year to July 2020. That's a notable decrease of 33% on last year. In particular, the salary of UK£391.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar companies from the same industry with market caps ranging from UK£300m to UK£1.2b, we found that the median CEO total compensation was UK£897k. This suggests that Ronnie George is paid below the industry median. What's more, Ronnie George holds UK£6.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 64% of total compensation out of all the companies we analyzed, while other remuneration made up 36% of the pie. Our data reveals that Volution Group allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Volution Group plc's Growth Numbers
Volution Group plc has reduced its earnings per share by 11% a year over the last three years. It saw its revenue drop 8.1% over the last year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Volution Group plc Been A Good Investment?
Volution Group plc has served shareholders reasonably well, with a total return of 18% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
As we noted earlier, Volution Group pays its CEO lower than the norm for similar-sized companies belonging to the same industry. While we have not been overly impressed by shareholder returns, EPS growth has been negative over the last three years, a real headache for the company. So, although we can't say CEO compensation is very high, shareholders might want to see an improvement in overall performance before agreeing that Ronnie deserves a bump.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Volution Group that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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