Is National Grid plc (LON:NG.) Overpaying Its CEO?

John Pettigrew became the CEO of National Grid plc (LON:NG.) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. 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.

View our latest analysis for National Grid

How Does John Pettigrew's Compensation Compare With Similar Sized Companies?

According to our data, National Grid plc has a market capitalization of UK£31b, and paid its CEO total annual compensation worth UK£4.6m over the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£944k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over UK£6.8b, and calculated the median CEO total compensation to be UK£4.6m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. Readers will want to know that National Grid pays a modest slice of remuneration through salary, as compared to the wider sector.

So John Pettigrew receives a similar amount to the median CEO pay, amongst 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 National Grid has changed over time.

Is National Grid plc Growing?

On average over the last three years, National Grid plc has grown earnings per share (EPS) by 1.0% each year (using a line of best fit). In the last year, its revenue changed by just 0.3%.

I generally like to see a little revenue growth, but it is good to see EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.

Has National Grid plc Been A Good Investment?

With a total shareholder return of 0.9% over three years, National Grid plc has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

John Pettigrew is paid around what is normal for the leaders of larger companies.

We think many would like to see better growth. But we don't think the CEO compensation is a problem. On another note, National Grid has 4 warning signs (and 1 which can't be ignored) we think you should know about.

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.

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.