Should You Worry About Caffyns plc's (LON:CFYN) CEO Salary Level?
Simon G. Caffyn became the CEO of Caffyns plc (LON:CFYN) in 1998. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Caffyns
How Does Simon G. Caffyn's Compensation Compare With Similar Sized Companies?
Our data indicates that Caffyns plc is worth UK£11m, and total annual CEO compensation is UK£364k. (This figure is for the year to March 2019). Notably, that's an increase of 21% over the year before. While we always look at total compensation first, we note that the salary component is less, at UK£284k. We examined a group of similar sized companies, with market capitalizations of below UK£163m. The median CEO total compensation in that group is UK£251k.
As you can see, Simon G. Caffyn is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Caffyns plc is paying too much. 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 a visual representation of the CEO compensation at Caffyns, below.
Is Caffyns plc Growing?
Over the last three years Caffyns plc has shrunk its earnings per share by an average of 34% per year (measured with a line of best fit). In the last year, its revenue is down -3.1%.
Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Caffyns plc Been A Good Investment?
Given the total loss of 19% over three years, many shareholders in Caffyns plc are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared the total CEO remuneration paid by Caffyns 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.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Just as bad, share price gains for investors have failed to materialize, over the same period. This contrasts with the growth in CEO remuneration, year on year. In our opinion the CEO might be paid too generously! Shareholders may want to check for free if Caffyns 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
