Is CML Microsystems plc’s (LON:CML) CEO Paid Enough Relative To Peers?

In 2007 Chris Gurry was appointed CEO of CML Microsystems plc (LON:CML). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for CML Microsystems

How Does Chris Gurry’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that CML Microsystems plc has a market cap of UK£63m, and reported total annual CEO compensation of UK£314k for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at UK£214k. We examined a group of similar sized companies, with market capitalizations of below UK£152m. The median CEO total compensation in that group is UK£250k.

So Chris Gurry is paid around the average of the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see, below, how CEO compensation at CML Microsystems has changed over time.

LSE:CML CEO Compensation, January 23rd 2020
LSE:CML CEO Compensation, January 23rd 2020

Is CML Microsystems plc Growing?

On average over the last three years, CML Microsystems plc has shrunk earnings per share by 16% each year (measured with a line of best fit). Its revenue is down 15% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has CML Microsystems plc Been A Good Investment?

CML Microsystems plc has generated a total shareholder return of 8.1% over three years, so most shareholders wouldn’t be too disappointed. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

Remuneration for Chris Gurry is close enough to the median pay for a CEO of a similar sized company .

We’re not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We wouldn’t say the CEO pay is too high, but one might argue that the company should improve returns to shareholders before increasing it. Shareholders may want to check for free if CML Microsystems insiders are buying or selling shares.

Important note: CML Microsystems 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.

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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