How Should Investors Feel About G4S plc's (LON:GFS) CEO Pay?

January 24, 2020

Ashley Almanza has been the CEO of G4S plc (LON:GFS) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for G4S

How Does Ashley Almanza's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that G4S plc has a market cap of UK£3.2b, and reported total annual CEO compensation of UK£2.9m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at UK£959k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from UK£1.5b to UK£4.9b, and the median CEO total compensation was UK£1.7m.

It would therefore appear that G4S plc pays Ashley Almanza 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. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at G4S has changed from year to year.

LSE:GFS CEO Compensation, January 25th 2020

Is G4S plc Growing?

On average over the last three years, G4S plc has shrunk earnings per share by 18% each year (measured with a line of best fit). Its revenue is up 1.7% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has G4S plc Been A Good Investment?

Since shareholders would have lost about 8.3% over three years, some G4S plc shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We examined the amount G4S plc pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling G4S shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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