In 2017 Patrick Georges André was appointed CEO of Vesuvius plc (LON:VSVS). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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.
How Does Patrick Georges André's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Vesuvius plc has a market cap of UK£1.0b, and reported total annual CEO compensation of UK£2.0m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£525k. 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£805m to UK£2.6b, we found the median CEO total compensation was UK£1.5m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Vesuvius stands. Speaking on an industry level, we can see that nearly 58% of total compensation represents salary, while the remainder of 42% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Vesuvius, in sharp contrast to the overall sector.
Thus we can conclude that Patrick Georges André receives more in total compensation than the median of a group of companies in the same market, and of similar size to Vesuvius plc. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. The graphic below shows how CEO compensation at Vesuvius has changed from year to year.
Is Vesuvius plc Growing?
Vesuvius plc has seen earnings per share (EPS) move positively by an average of 31% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 4.9%.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.
Has Vesuvius plc Been A Good Investment?
Since shareholders would have lost about 22% over three years, some Vesuvius plc shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We examined the amount Vesuvius plc pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Moving away from CEO compensation for the moment, we've identified 4 warning signs for Vesuvius that you should be aware of before investing.
If you want to buy a stock that is better than Vesuvius, 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 email@example.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.
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