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Chris Loughlin has been the CEO of Pennon Group Plc (LON:PNN) since 2016. 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 Chris Loughlin's Compensation Compare With Similar Sized Companies?
According to our data, Pennon Group Plc has a market capitalization of UK£3.1b, and pays its CEO total annual compensation worth UK£1.2m. (This number is for the twelve months until March 2018). We think total compensation is more important but we note that the CEO salary is lower, at UK£518k. We looked at a group of companies with market capitalizations from UK£1.5b to UK£4.9b, and the median CEO total compensation was UK£1.8m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at Pennon Group has changed from year to year.
Is Pennon Group Plc Growing?
Over the last three years Pennon Group Plc has grown its earnings per share (EPS) by an average of 16% per year (using a line of best fit). It achieved revenue growth of 1.4% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.
Has Pennon Group Plc Been A Good Investment?
With a total shareholder return of 4.7% over three years, Pennon Group Plc has done okay by shareholders. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Pennon Group Plc is currently paying its CEO below what is normal for companies of its size. Since the business is growing, many would argue this suggests the pay is modest. While returns over the last few years haven't been top notch, there is nothing to suggest to us that Chris Loughlin is overcompensated.
It's great to see a company that pays its CEO reasonably, even while growing. But for me, it's even better if insiders are also buying shares with their own cold, hard, cash. Shareholders may want to check for free if Pennon Group insiders are buying or selling shares.
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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.