How Should Investors React To TBC Bank Group's (LON:TBCG) CEO Pay?

Simply Wall St
October 21, 2020

This article will reflect on the compensation paid to Vakhtang Butskhrikidze who has served as CEO of TBC Bank Group PLC (LON:TBCG) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for TBC Bank Group

How Does Total Compensation For Vakhtang Butskhrikidze Compare With Other Companies In The Industry?

According to our data, TBC Bank Group PLC has a market capitalization of UK£522m, and paid its CEO total annual compensation worth US$5.4m over the year to December 2019. We note that's a decrease of 40% compared to last year. In particular, the salary of GEL2.76m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from UK£309m to UK£1.2b, the reported median CEO total compensation was US$559k. Accordingly, our analysis reveals that TBC Bank Group PLC pays Vakhtang Butskhrikidze north of the industry median. Moreover, Vakhtang Butskhrikidze also holds UK£7.6m worth of TBC Bank Group stock directly under their own name.

Component20192018Proportion (2019)
Salary US$2.8m US$2.5m 51%
Other US$2.6m US$6.5m 49%
Total CompensationUS$5.4m US$9.0m100%

Talking in terms of the industry, salary represented approximately 44% of total compensation out of all the companies we analyzed, while other remuneration made up 56% of the pie. TBC Bank Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

LSE:TBCG CEO Compensation October 21st 2020

TBC Bank Group PLC's Growth

TBC Bank Group PLC saw earnings per share stay pretty flat over the last three years. It saw its revenue drop 14% over the last year.

The lack of EPS growth is certainly unimpressive. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 TBC Bank Group PLC Been A Good Investment?

Given the total shareholder loss of 41% over three years, many shareholders in TBC Bank Group PLC are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Vakhtang is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for TBC Bank Group (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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