Andy Golding became the CEO of OSB Group Plc (LON:OSB) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for OSB Group.
Check out our latest analysis for OSB Group
How Does Total Compensation For Andy Golding Compare With Other Companies In The Industry?
At the time of writing, our data shows that OSB Group Plc has a market capitalization of UK£1.8b, and reported total annual CEO compensation of UK£1.6m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£516k.
In comparison with other companies in the industry with market capitalizations ranging from UK£750m to UK£2.4b, the reported median CEO total compensation was UK£1.7m. From this we gather that Andy Golding is paid around the median for CEOs in the industry. What's more, Andy Golding holds UK£3.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | UK£516k | UK£501k | 32% |
| Other | UK£1.1m | UK£1.1m | 68% |
| Total Compensation | UK£1.6m | UK£1.6m | 100% |
Talking in terms of the industry, salary represented approximately 41% of total compensation out of all the companies we analyzed, while other remuneration made up 59% of the pie. It's interesting to note that OSB Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
OSB Group Plc's Growth
Over the last three years, OSB Group Plc has shrunk its earnings per share by 1.9% per year. Its revenue is up 35% over the last year.
The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has OSB Group Plc Been A Good Investment?
With a total shareholder return of 6.0% over three years, OSB Group Plc has done okay by shareholders. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
To Conclude...
As we touched on above, OSB Group Plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But revenue growth over the last year can't be ignored. Shareholder returns, in comparison, have not been as impressive during the same period. Additionally, shareholders would want to keep their eyes on EPS, since growth has been negative for the metric for the last three years. We wouldn't say compensation is inappropriate considering the stable performance, but shareholders might want to see some better numbers before warming to the idea of a bump.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for OSB Group you should be aware of, and 1 of them doesn't sit too well with us.
Important note: OSB Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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About LSE:OSB
OSB Group
Through its subsidiaries, operates as a specialist mortgage lending and retail savings company in the United Kingdom and the Channel Islands.
Very undervalued with solid track record and pays a dividend.
