Jon Stanton has been the CEO of The Weir Group PLC (LON:WEIR) since 2016. 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Jon Stanton’s Compensation Compare With Similar Sized Companies?
According to our data, The Weir Group PLC has a market capitalization of UK£3.6b, and paid its CEO total annual compensation worth UK£2.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at UK£664k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£1.5b to UK£4.9b. The median total CEO compensation was UK£1.7m.
It would therefore appear that The Weir Group PLC pays Jon Stanton 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.
You can see, below, how CEO compensation at Weir Group has changed over time.
Is The Weir Group PLC Growing?
Over the last three years The Weir Group PLC has grown its earnings per share (EPS) by an average of 50% per year (using a line of best fit). In the last year, its revenue is up 27%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has The Weir Group PLC Been A Good Investment?
With a three year total loss of 25%, The Weir Group PLC would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at The Weir Group PLC with the amount paid at companies with a similar market capitalization. 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. Having said that, shareholders may be disappointed with the weak returns over the last three years. 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. So you may want to check if insiders are buying Weir Group shares with their own money (free access).
Important note: Weir Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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