David Brown became the CEO of The Go-Ahead Group plc (LON:GOG) in 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does David Brown's Compensation Compare With Similar Sized Companies?
According to our data, The Go-Ahead Group plc has a market capitalization of UK£953m, and paid its CEO total annual compensation worth UK£1.3m over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at UK£571k. We looked at a group of companies with market capitalizations from UK£768m to UK£2.5b, and the median CEO total compensation was UK£1.4m.
So David Brown receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at Go-Ahead Group, below.
Is The Go-Ahead Group plc Growing?
The Go-Ahead Group plc has reduced its earnings per share by an average of 13% a year, over the last three years (measured with a line of best fit). Its revenue is up 10.0% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has The Go-Ahead Group plc Been A Good Investment?
The Go-Ahead Group plc has generated a total shareholder return of 16% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
David Brown is paid around the same as most CEOs of similar size companies.
The company isn't growing earnings per share, and nor have the total returns inspired us. We wouldn't say the CEO pay is too high, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. Whatever your view on compensation, you might want to check if insiders are buying or selling Go-Ahead Group shares (free trial).
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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