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How Much Is RELX PLC (LON:REL) Paying Its CEO?

Simply Wall St

Erik Engstrom became the CEO of RELX PLC (LON:REL) in 2009, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for RELX.

Check out our latest analysis for RELX

How Does Total Compensation For Erik Engstrom Compare With Other Companies In The Industry?

At the time of writing, our data shows that RELX PLC has a market capitalization of UK£35b, and reported total annual CEO compensation of UK£8.7m for the year to December 2019. That's a slightly lower by 5.0% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£1.2m.

For comparison, other companies in the industry with market capitalizations above UK£6.2b, reported a median total CEO compensation of UK£6.4m. Accordingly, our analysis reveals that RELX PLC pays Erik Engstrom north of the industry median. Moreover, Erik Engstrom also holds UK£18m worth of RELX stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

UK£1.2m

UK£1.2m

14%

Other

UK£7.4m

UK£7.9m

86%

Total Compensation

UK£8.7m

UK£9.1m

100%

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. RELX pays a modest slice of remuneration through salary, as compared 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.

ceo-compensation
ceo-compensation

A Look at RELX PLC's Growth Numbers

RELX PLC's earnings per share (EPS) grew 1.5% per year over the last three years. It saw its revenue drop 3.1% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has RELX PLC Been A Good Investment?

RELX PLC has served shareholders reasonably well, with a total return of 20% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, RELX pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, EPS growth is not moving in the right direction, and the returns to shareholders could have been better, over the last three years. Overall, although the company has delivered steady performance, we would like to see an improvement in key metrics before we can say the high CEO compensation is justified.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for RELX that investors should look into moving forward.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.