Should You Worry About Kainos Group plc's (LON:KNOS) CEO Pay Cheque?
Brendan Mooney became the CEO of Kainos Group plc (LON:KNOS) in 2001. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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.
Check out our latest analysis for Kainos Group
How Does Brendan Mooney's Compensation Compare With Similar Sized Companies?
Our data indicates that Kainos Group plc is worth UK£851m, and total annual CEO compensation was reported as UK£603k for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£220k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from UK£321m to UK£1.3b, we found the median CEO total compensation was UK£975k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Kainos Group. On a sector level, around 64% of total compensation represents salary and 36% is other remuneration. Kainos Group sets aside a smaller share of compensation for salary, in comparison to the overall industry.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at Kainos Group, below.
Is Kainos Group plc Growing?
On average over the last three years, Kainos Group plc has seen earnings per share (EPS) move in a favourable direction by 18% each year (using a line of best fit). In the last year, its revenue is up 40%.
This demonstrates that the company has been improving recently. A good result. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Kainos Group plc Been A Good Investment?
Boasting a total shareholder return of 197% over three years, Kainos Group plc has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Kainos Group plc is currently paying its CEO below what is normal for companies of its size.
Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Brendan Mooney deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for Kainos Group (2 can't be ignored!) that you should be aware of before investing here.
If you want to buy a stock that is better than Kainos Group, this free list of high return, low debt companies is a great place to look.
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.
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. Thank you for reading.
