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How Should Investors React To Centamin plc's (LON:CEY) CEO Pay?

Simply Wall St

Andrew Pardey became the CEO of Centamin plc (LON:CEY) in 2015. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Centamin

How Does Andrew Pardey's Compensation Compare With Similar Sized Companies?

According to our data, Centamin plc has a market capitalization of UK£1.3b, and paid its CEO total annual compensation worth US$1.1m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$692k. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$1.8m.

Most shareholders would consider it a positive that Andrew Pardey takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

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

LSE:CEY CEO Compensation, October 13th 2019

Is Centamin plc Growing?

On average over the last three years, Centamin plc has shrunk earnings per share by 33% each year (measured with a line of best fit). In the last year, its revenue is down 12%.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Centamin plc Been A Good Investment?

Given the total loss of 3.9% over three years, many shareholders in Centamin plc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It appears that Centamin plc remunerates its CEO below most similar sized companies.

The compensation paid to Andrew Pardey is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Centamin.

Important note: Centamin 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.