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Is Domino's Pizza Group plc (LON:DOM) Excessively Paying Its CEO?

Simply Wall St

In 2014 David Wild was appointed CEO of Domino's Pizza Group plc (LON:DOM). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Domino's Pizza Group

How Does David Wild's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Domino's Pizza Group plc has a market cap of UK£1.5b, and reported total annual CEO compensation of UK£699k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at UK£510k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£755m to UK£2.4b. The median total CEO compensation was UK£1.4m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at Domino's Pizza Group has changed over time.

LSE:DOM CEO Compensation, January 1st 2020

Is Domino's Pizza Group plc Growing?

Over the last three years Domino's Pizza Group plc has shrunk its earnings per share by an average of 12% per year (measured with a line of best fit). Revenue was pretty flat on last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Domino's Pizza Group plc Been A Good Investment?

With a three year total loss of 2.9%, Domino's Pizza Group plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

It looks like Domino's Pizza Group plc pays its CEO less than similar sized companies.

Shareholders should note that compensation for David Wild is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. So you may want to check if insiders are buying Domino's Pizza Group shares with their own money (free access).

Important note: Domino's Pizza Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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. Thank you for reading.