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A Quick Analysis On Howden Joinery Group's (LON:HWDN) CEO Salary

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Simply Wall St
·3 min read
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This article will reflect on the compensation paid to Andrew Livingston who has served as CEO of Howden Joinery Group Plc (LON:HWDN) since 2018. This analysis will also assess whether Howden Joinery Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Howden Joinery Group

Comparing Howden Joinery Group Plc's CEO Compensation With the industry

According to our data, Howden Joinery Group Plc has a market capitalization of UK£3.7b, and paid its CEO total annual compensation worth UK£1.4m over the year to December 2019. We note that's a decrease of 47% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£564k.

On comparing similar companies from the same industry with market caps ranging from UK£3.0b to UK£9.0b, we found that the median CEO total compensation was UK£1.7m. This suggests that Howden Joinery Group remunerates its CEO largely in line with the industry average. Furthermore, Andrew Livingston directly owns UK£1.0m worth of shares in the company.

Component

2019

2018

Proportion (2019)

Salary

UK£564k

UK£413k

41%

Other

UK£828k

UK£2.2m

59%

Total Compensation

UK£1.4m

UK£2.6m

100%

On an industry level, around 46% of total compensation represents salary and 54% is other remuneration. It's interesting to note that Howden Joinery Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Howden Joinery Group Plc's Growth Numbers

Howden Joinery Group Plc has reduced its earnings per share by 7.2% a year over the last three years. It saw its revenue drop 9.6% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Howden Joinery Group Plc Been A Good Investment?

Boasting a total shareholder return of 47% over three years, Howden Joinery Group Plc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we touched on above, Howden Joinery Group Plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good when you see that EPS growth over the last three years has been negative. But on the bright side, shareholder returns have moved northward during the same period. We do not think CEO compensation is a problem, but shrinking EPS is undoubtedly an issue that will have to be addressed.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Howden Joinery Group (free visualization of insider trades).

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.

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.