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How Should Investors React To Future plc's (LON:FUTR) CEO Pay?

Simply Wall St

Zillah Byng-Thorne has been the CEO of Future plc (LON:FUTR) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. 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.

Check out our latest analysis for Future

How Does Zillah Byng-Thorne's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Future plc has a market cap of UK£1.4b, and reported total annual CEO compensation of UK£4.8m for the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£400k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£775m to UK£2.5b. The median total CEO compensation was UK£1.4m.

As you can see, Zillah Byng-Thorne is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Future plc is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

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

LSE:FUTR CEO Compensation, November 18th 2019

Is Future plc Growing?

Over the last three years Future plc has grown its earnings per share (EPS) by an average of 121% per year (using a line of best fit). It achieved revenue growth of 78% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.

Has Future plc Been A Good Investment?

Most shareholders would probably be pleased with Future plc for providing a total return of 1293% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared the total CEO remuneration paid by Future plc, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Future shares (free trial).

If you want to buy a stock that is better than Future, this free list of high return, low debt companies is a great place to look.

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.