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Is Ilika plc's (LON:IKA) CEO Overpaid Relative To Its Peers?

Simply Wall St

Graeme Purdy is the CEO of Ilika plc (LON:IKA). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Ilika

How Does Graeme Purdy's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Ilika plc has a market cap of UK£21m, and reported total annual CEO compensation of UK£282k for the year to April 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£193k. We looked at a group of companies with market capitalizations under UK£155m, and the median CEO total compensation was UK£248k.

So Graeme Purdy receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

You can see a visual representation of the CEO compensation at Ilika, below.

AIM:IKA CEO Compensation, November 18th 2019

Is Ilika plc Growing?

Ilika plc has increased its earnings per share (EPS) by an average of 25% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 26%.

This demonstrates that the company has been improving recently. A good result. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Ilika plc Been A Good Investment?

Since shareholders would have lost about 53% over three years, some Ilika 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...

Remuneration for Graeme Purdy is close enough to the median pay for a CEO of a similar sized company .

We'd say the company can boast of its EPS growth, but it's disappointing to see negative shareholder returns over three years. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. So you may want to check if insiders are buying Ilika shares with their own money (free access).

Important note: Ilika 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.

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.