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Should You Worry About HomeServe plc's (LON:HSV) CEO Pay?

Simply Wall St

Richard Harpin has been the CEO of HomeServe plc (LON:HSV) since 2004. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for HomeServe

How Does Richard Harpin's Compensation Compare With Similar Sized Companies?

According to our data, HomeServe plc has a market capitalization of UK£3.8b, and pays its CEO total annual compensation worth UK£4.7m. (This is based on the year to March 2019). That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at UK£574k. When we examined a selection of companies with market caps ranging from UK£1.6b to UK£5.2b, we found the median CEO total compensation was UK£1.9m.

It would therefore appear that HomeServe plc pays Richard Harpin more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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.

The graphic below shows how CEO compensation at HomeServe has changed from year to year.

LSE:HSV CEO Compensation, September 11th 2019

Is HomeServe plc Growing?

On average over the last three years, HomeServe plc has grown earnings per share (EPS) by 18% each year (using a line of best fit). In the last year, its revenue is up 12%.

This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. It could be important to check this free visual depiction of what analysts expect for the future.

Has HomeServe plc Been A Good Investment?

Boasting a total shareholder return of 114% over three years, HomeServe plc has done well by shareholders. 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...

We compared the total CEO remuneration paid by HomeServe plc, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling HomeServe (free visualization of insider trades).

If you want to buy a stock that is better than HomeServe, this free list of high return, low debt companies is a great place to look.

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.