How Should Investors Feel About OPG Power Ventures' (LON:OPG) CEO Remuneration?
Arvind Gupta became the CEO of OPG Power Ventures Plc (LON:OPG) in 2008, 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.
Check out our latest analysis for OPG Power Ventures
Comparing OPG Power Ventures Plc's CEO Compensation With the industry
According to our data, OPG Power Ventures Plc has a market capitalization of UK£72m, and paid its CEO total annual compensation worth UK£500k over the year to March 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary of UK£500k is the entirety of the CEO compensation.
On comparing similar-sized companies in the industry with market capitalizations below UK£146m, we found that the median total CEO compensation was UK£189k. Hence, we can conclude that Arvind Gupta is remunerated higher than the industry median. Moreover, Arvind Gupta also holds UK£2.4m worth of OPG Power Ventures stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | UK£500k | UK£500k | 100% |
Other | - | - | - |
Total Compensation | UK£500k | UK£500k | 100% |
On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. At the company level, OPG Power Ventures pays Arvind Gupta solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
OPG Power Ventures Plc's Growth
OPG Power Ventures Plc has reduced its earnings per share by 23% a year over the last three years. Its revenue is down 21% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has OPG Power Ventures Plc Been A Good Investment?
OPG Power Ventures Plc has not done too badly by shareholders, with a total return of 7.6%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
To Conclude...
OPG Power Ventures rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, OPG Power Ventures pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look great when you realize that the company has been suffering from negative EPS growth for the last three years. And shareholder returns are decent but not great. So you can understand why we do not think CEO compensation is particularly modest!
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for OPG Power Ventures (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from OPG Power Ventures, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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