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How Should Investors Feel About IDOX's (LON:IDOX) CEO Remuneration?

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Simply Wall St
·3 min read
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This article will reflect on the compensation paid to Dave Meaden who has served as CEO of IDOX plc (LON:IDOX) since 2018. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for IDOX

How Does Total Compensation For Dave Meaden Compare With Other Companies In The Industry?

Our data indicates that IDOX plc has a market capitalization of UK£233m, and total annual CEO compensation was reported as UK£510k for the year to October 2020. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at UK£331.0k constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between UK£146m and UK£583m, we discovered that the median CEO total compensation of that group was UK£499k. So it looks like IDOX compensates Dave Meaden in line with the median for the industry. Moreover, Dave Meaden also holds UK£247k worth of IDOX stock directly under their own name.

Component

2020

2019

Proportion (2020)

Salary

UK£331k

UK£331k

65%

Other

UK£179k

UK£180k

35%

Total Compensation

UK£510k

UK£511k

100%

On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. Our data reveals that IDOX allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at IDOX plc's Growth Numbers

IDOX plc has reduced its earnings per share by 18% a year over the last three years. In the last year, its revenue is up 3.8%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has IDOX plc Been A Good Investment?

Most shareholders would probably be pleased with IDOX plc for providing a total return of 61% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As we touched on above, IDOX plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good when you see that EPS growth over the last three years has been negative. On the other hand, shareholder returns are showing positive trends over the same time frame. We do not think CEO compensation is a problem, but shrinking EPS is undoubtedly an issue that will have to be addressed.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for IDOX that you should be aware of before investing.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.