What We Learned About Mears Group's (LON:MER) CEO Compensation
This article will reflect on the compensation paid to David Miles who has served as CEO of Mears Group plc (LON:MER) since 2010. This analysis will also assess whether Mears Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Mears Group
Comparing Mears Group plc's CEO Compensation With the industry
According to our data, Mears Group plc has a market capitalization of UK£163m, and paid its CEO total annual compensation worth UK£469k over the year to December 2019. That's a modest increase of 3.1% on the prior year. Notably, the salary which is UK£387.0k, represents most of the total compensation being paid.
On comparing similar companies from the same industry with market caps ranging from UK£75m to UK£300m, we found that the median CEO total compensation was UK£482k. So it looks like Mears Group compensates David Miles in line with the median for the industry. What's more, David Miles holds UK£257k worth of shares in the company in their own name.
Component | 2019 | 2018 | Proportion (2019) |
Salary | UK£387k | UK£387k | 83% |
Other | UK£82k | UK£68k | 17% |
Total Compensation | UK£469k | UK£455k | 100% |
Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. Mears Group pays out 83% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Mears Group plc's Growth Numbers
Over the last three years, Mears Group plc has shrunk its earnings per share by 62% per year. Its revenue is up 12% over the last year.
The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Mears Group plc Been A Good Investment?
Given the total shareholder loss of 60% over three years, many shareholders in Mears Group plc are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As we touched on above, Mears Group plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Mears 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.
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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