Is QinetiQ Group plc (LON:QQ.) Overpaying Its CEO?

Steve Wadey became the CEO of QinetiQ Group plc (LON:QQ.) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for QinetiQ Group

How Does Steve Wadey’s Compensation Compare With Similar Sized Companies?

According to our data, QinetiQ Group plc has a market capitalization of UK£1.6b, and pays its CEO total annual compensation worth UK£2.3m. (This figure is for the year to March 2019). That’s a notable increase of 54% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at UK£596k. We examined companies with market caps from UK£823m to UK£2.6b, and discovered that the median CEO total compensation of that group was UK£1.4m.

As you can see, Steve Wadey is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean QinetiQ 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 QinetiQ Group has changed from year to year.

LSE:QQ. CEO Compensation, August 6th 2019
LSE:QQ. CEO Compensation, August 6th 2019

Is QinetiQ Group plc Growing?

Over the last three years QinetiQ Group plc has grown its earnings per share (EPS) by an average of 7.1% per year (using a line of best fit). Its revenue is up 9.4% over last year.

I’d prefer higher revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise.

Has QinetiQ Group plc Been A Good Investment?

Boasting a total shareholder return of 35% over three years, QinetiQ Group plc has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by QinetiQ Group plc, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

While we generally prefer to see stronger EPS growth, there’s no arguing with the strong returns to shareholders, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. Shareholders may want to check for free if QinetiQ 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.