Key Things To Understand About Essentra's (LON:ESNT) CEO Pay Cheque
This article will reflect on the compensation paid to Paul Forman who has served as CEO of Essentra plc (LON:ESNT) since 2017. 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 Essentra
How Does Total Compensation For Paul Forman Compare With Other Companies In The Industry?
According to our data, Essentra plc has a market capitalization of UK£787m, and paid its CEO total annual compensation worth UK£1.4m over the year to December 2019. We note that's a small decrease of 3.7% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£639k.
On examining similar-sized companies in the industry with market capitalizations between UK£306m and UK£1.2b, we discovered that the median CEO total compensation of that group was UK£991k. This suggests that Paul Forman is paid more than the median for the industry. Furthermore, Paul Forman directly owns UK£780k worth of shares in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | UK£639k | UK£625k | 47% |
Other | UK£729k | UK£795k | 53% |
Total Compensation | UK£1.4m | UK£1.4m | 100% |
Talking in terms of the industry, salary represented approximately 71% of total compensation out of all the companies we analyzed, while other remuneration made up 29% of the pie. Essentra pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Essentra plc's Growth Numbers
Essentra plc has seen its earnings per share (EPS) increase by 112% a year over the past three years. Its revenue is down 5.0% over the previous year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Essentra plc Been A Good Investment?
With a three year total loss of 36% for the shareholders, Essentra plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As previously discussed, Paul is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the earnings per share growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say Paul is underpaid, in fact compensation is definitely on the higher side.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Essentra that investors should be aware of in a dynamic business environment.
Switching gears from Essentra, 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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