Why Chemring Group's (LON:CHG) CEO Pay Matters
This article will reflect on the compensation paid to Michael Ord who has served as CEO of Chemring Group PLC (LON:CHG) since 2018. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Chemring Group.
Check out our latest analysis for Chemring Group
How Does Total Compensation For Michael Ord Compare With Other Companies In The Industry?
According to our data, Chemring Group PLC has a market capitalization of UK£823m, and paid its CEO total annual compensation worth UK£1.0m over the year to October 2020. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£440k.
In comparison with other companies in the industry with market capitalizations ranging from UK£289m to UK£1.2b, the reported median CEO total compensation was UK£993k. So it looks like Chemring Group compensates Michael Ord in line with the median for the industry. Furthermore, Michael Ord directly owns UK£146k worth of shares in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | UK£440k | UK£430k | 42% |
Other | UK£605k | UK£591k | 58% |
Total Compensation | UK£1.0m | UK£1.0m | 100% |
On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. Our data reveals that Chemring Group allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Chemring Group PLC's Growth Numbers
Chemring Group PLC has seen its earnings per share (EPS) increase by 93% a year over the past three years. It achieved revenue growth of 20% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Chemring Group PLC Been A Good Investment?
We think that the total shareholder return of 67%, over three years, would leave most Chemring Group 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.
In Summary...
As we noted earlier, Chemring Group pays its CEO in line with similar-sized companies belonging to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. So one could argue that CEO compensation is quite modest, if you consider company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Chemring Group (free visualization of insider trades).
Important note: Chemring Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.
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