Does Games Workshop Group PLC’s (LON:GAW) CEO Salary Reflect Performance?

In 2015 Kevin Rountree was appointed CEO of Games Workshop Group PLC (LON:GAW). 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Games Workshop Group

How Does Kevin Rountree’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Games Workshop Group PLC has a market cap of UK£1.9b, and reported total annual CEO compensation of UK£1.1m for the year to June 2019. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at UK£551k. When we examined a selection of companies with market caps ranging from UK£1.5b to UK£4.9b, we found the median CEO total compensation was UK£2.0m.

A first glance this seems like a real positive for shareholders, since Kevin Rountree is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at Games Workshop Group, below.

LSE:GAW CEO Compensation, March 11th 2020
LSE:GAW CEO Compensation, March 11th 2020

Is Games Workshop Group PLC Growing?

Over the last three years Games Workshop Group PLC has grown its earnings per share (EPS) by an average of 35% per year (using a line of best fit). It achieved revenue growth of 18% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Games Workshop Group PLC Been A Good Investment?

Most shareholders would probably be pleased with Games Workshop Group PLC for providing a total return of 619% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

Games Workshop Group PLC is currently paying its CEO below what is normal for companies of its size.

Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Kevin Rountree deserves a raise! It’s not often we see shareholders do so well, and yet the CEO is paid modestly. The cherry on top would be if company insiders are 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 Games Workshop Group (1 shouldn’t be ignored!) that you should be aware of before investing here.

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.

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.

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