This article will reflect on the compensation paid to Haroon Sheikh who has served as CEO of CareTech Holdings PLC (LON:CTH) since 1993. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Haroon Sheikh Compare With Other Companies In The Industry?
At the time of writing, our data shows that CareTech Holdings PLC has a market capitalization of UK£484m, and reported total annual CEO compensation of UK£920k for the year to September 2019. We note that's an increase of 8.6% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£400k.
For comparison, other companies in the same industry with market capitalizations ranging between UK£313m and UK£1.3b had a median total CEO compensation of UK£698k. Hence, we can conclude that Haroon Sheikh is remunerated higher than the industry median. What's more, Haroon Sheikh holds UK£2.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. In CareTech Holdings' 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.
CareTech Holdings PLC's Growth
Over the last three years, CareTech Holdings PLC has shrunk its earnings per share by 10% per year. Its revenue is up 41% over the last year.
The reduction in earnings, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CareTech Holdings PLC Been A Good Investment?
CareTech Holdings PLC has served shareholders reasonably well, with a total return of 11% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As we touched on above, CareTech Holdings PLC is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, revenue figures for the company are growing at a nice pace over the last year. Although shareholder returns are also growing during this time, they have not impressed us as much. Earnings growth, meanwhile, has been negative. All things considered, we don't think CEO compensation is unfair, though shareholders will likely want to see an overall improvement in performance before any potential raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is potentially serious) in CareTech Holdings we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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