Key Things To Understand About Abcam's (LON:ABC) CEO Pay Cheque
Alan Hirzel became the CEO of Abcam plc (LON:ABC) in 2014, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Abcam.
View our latest analysis for Abcam
Comparing Abcam plc's CEO Compensation With the industry
At the time of writing, our data shows that Abcam plc has a market capitalization of UK£3.2b, and reported total annual CEO compensation of UK£1.6m for the year to June 2020. Notably, that's a decrease of 17% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£615k.
On examining similar-sized companies in the industry with market capitalizations between UK£1.5b and UK£4.8b, we discovered that the median CEO total compensation of that group was UK£3.0m. Accordingly, Abcam pays its CEO under the industry median. Moreover, Alan Hirzel also holds UK£2.8m worth of Abcam 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£615k | UK£600k | 39% |
Other | UK£981k | UK£1.3m | 61% |
Total Compensation | UK£1.6m | UK£1.9m | 100% |
Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. In Abcam's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Abcam plc's Growth
Abcam plc has reduced its earnings per share by 34% a year over the last three years. In the last year, its revenue changed by just 0.01%.
The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Abcam plc Been A Good Investment?
Boasting a total shareholder return of 46% over three years, Abcam plc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As we touched on above, Abcam plc is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for Abcam that investors should be aware of in a dynamic business environment.
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@simplywallst.com.
