Is Close Brothers Group plc’s (LON:CBG) CEO Overpaid Relative To Its Peers?

Per Prebensen became the CEO of Close Brothers Group plc (LON:CBG) in 2009. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Close Brothers Group

How Does Per Prebensen’s Compensation Compare With Similar Sized Companies?

Our data indicates that Close Brothers Group plc is worth UK£1.9b, and total annual CEO compensation is UK£2.5m. (This figure is for the year to July 2018). We think total compensation is more important but we note that the CEO salary is lower, at UK£550k. We looked at a group of companies with market capitalizations from UK£829m to UK£2.7b, and the median CEO total compensation was UK£1.5m.

As you can see, Per Prebensen is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Close Brothers Group plc is paying too much. 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 Close Brothers Group has changed from year to year.

LSE:CBG CEO Compensation, August 14th 2019
LSE:CBG CEO Compensation, August 14th 2019

Is Close Brothers Group plc Growing?

On average over the last three years, Close Brothers Group plc has grown earnings per share (EPS) by 3.6% each year (using a line of best fit). Its revenue is up 3.2% over last year.

I’m not particularly impressed by the revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise.

Has Close Brothers Group plc Been A Good Investment?

Close Brothers Group plc has not done too badly by shareholders, with a total return of 5.8%, over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We examined the amount Close Brothers Group 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.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Shareholders may want to check for free if Close Brothers Group insiders are buying or selling shares.

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.

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.

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. Thank you for reading.