Jon Stanton became the CEO of The Weir Group PLC (LON:WEIR) in 2016, and we think it’s a good time to look at the executive’s compensation against the backdrop of overall company performance. This analysis will also assess whether Weir Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing The Weir Group PLC’s CEO Compensation With the industry
According to our data, The Weir Group PLC has a market capitalization of UK£2.8b, and paid its CEO total annual compensation worth UK£1.7m over the year to December 2019. That’s a notable decrease of 28% on last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at UK£682k.
In comparison with other companies in the industry with market capitalizations ranging from UK£1.6b to UK£5.2b, the reported median CEO total compensation was UK£1.7m. From this we gather that Jon Stanton is paid around the median for CEOs in the industry. What’s more, Jon Stanton holds UK£1.3m worth of shares in the company in their own name.
Speaking on an industry level, nearly 48% of total compensation represents salary, while the remainder of 52% is other remuneration. Weir Group pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
The Weir Group PLC’s Growth
Over the last three years, The Weir Group PLC has shrunk its earnings per share by 67% per year. Its revenue is up 8.7% over the last year.
Few shareholders would be pleased to read that earnings have declined. The modest increase in revenue in the last year isn’t enough to make us overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has The Weir Group PLC Been A Good Investment?
Given the total shareholder loss of 35% over three years, many shareholders in The Weir Group PLC are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Jon is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining earnings growth and shareholder returns over the last three years. We’d stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation is an important area to keep your eyes on, but we’ve also need to pay attention to other attributes of the company. That’s why we did our research, and identified 3 warning signs for Weir Group (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
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.
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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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