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Martin Griffiths has been the CEO of Stagecoach Group plc (LON:SGC) since 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Martin Griffiths's Compensation Compare With Similar Sized Companies?
Our data indicates that Stagecoach Group plc is worth UK£327m, and total annual CEO compensation was reported as UK£1.8m for the year to April 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£652k. 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£164m to UK£657m, and discovered that the median CEO total compensation of that group was UK£776k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Stagecoach Group stands. On a sector level, around 45% of total compensation represents salary and 55% is other remuneration. So it seems like there isn't a significant difference between Stagecoach Group and the broader market, in terms of salary allocation in the overall compensation package.
Thus we can conclude that Martin Griffiths receives more in total compensation than the median of a group of companies in the same market, and of similar size to Stagecoach Group plc. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Stagecoach Group has changed over time.
Is Stagecoach Group plc Growing?
On average over the last three years, Stagecoach Group plc has seen earnings per share (EPS) move in a favourable direction by 23% each year (using a line of best fit). It saw its revenue drop 18% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Stagecoach Group plc Been A Good Investment?
Given the total loss of 67% over three years, many shareholders in Stagecoach Group plc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared the total CEO remuneration paid by Stagecoach Group plc, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shifting gears from CEO pay for a second, we've spotted 4 warning signs for Stagecoach Group you should be aware of, and 1 of them doesn't sit too well with us.
Important note: Stagecoach Group 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.
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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. Thank you for reading.