Robin Watson became the CEO of John Wood Group PLC (LON:WG.) in 2016, 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 assess whether John Wood Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing John Wood Group PLC's CEO Compensation With the industry
According to our data, John Wood Group PLC has a market capitalization of UK£1.5b, and paid its CEO total annual compensation worth UK£1.7m over the year to December 2019. Notably, that's a decrease of 9.9% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£750k.
In comparison with other companies in the industry with market capitalizations ranging from UK£766m to UK£2.5b, the reported median CEO total compensation was UK£2.8m. That is to say, Robin Watson is paid under the industry median. Moreover, Robin Watson also holds UK£740k worth of John Wood Group stock directly under their own name.
On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. John Wood Group pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at John Wood Group PLC's Growth Numbers
John Wood Group PLC's earnings per share (EPS) grew 13% per year over the last three years. In the last year, its revenue is down 1.2%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has John Wood Group PLC Been A Good Investment?
With a three year total loss of 59% for the shareholders, John Wood Group PLC would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, John Wood Group pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Importantly though, the company has impressed with its earnings per share growth over three years. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when earnings are up. But we believe shareholders would want to see healthier returns before the CEO gets a raise.
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 2 warning signs for John Wood Group (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from John Wood Group, 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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