In 2013 Simon Litherland was appointed CEO of Britvic plc (LON:BVIC). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Simon Litherland's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Britvic plc has a market cap of UK£2.5b, and reported total annual CEO compensation of UK£3.5m for the year to September 2019. That's a notable increase of 61% on last year. We think total compensation is more important but we note that the CEO salary is lower, at UK£624k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from UK£1.5b to UK£5.0b, and discovered that the median CEO total compensation of that group was UK£1.8m.
Thus we can conclude that Simon Litherland receives more in total compensation than the median of a group of companies in the same market, and of similar size to Britvic plc. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Britvic, below.
Is Britvic plc Growing?
Over the last three years Britvic plc has shrunk its earnings per share by an average of 4.6% per year (measured with a line of best fit). It achieved revenue growth of 2.8% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. 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 Britvic plc Been A Good Investment?
I think that the total shareholder return of 63%, over three years, would leave most Britvic plc shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared total CEO remuneration at Britvic plc with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. But clearly there are some positives, because investors have done well over the same time frame. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. So you may want to check if insiders are buying Britvic shares with their own money (free access).
Important note: Britvic may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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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