David Dewhurst is the CEO of Dewhurst plc (LON:DWHT), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Dewhurst pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Dewhurst
Comparing Dewhurst plc's CEO Compensation With the industry
Our data indicates that Dewhurst plc has a market capitalization of UK£72m, and total annual CEO compensation was reported as UK£227k for the year to September 2020. That's a notable decrease of 44% on last year. In particular, the salary of UK£125.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below UK£147m, reported a median total CEO compensation of UK£321k. So it looks like Dewhurst compensates David Dewhurst in line with the median for the industry. What's more, David Dewhurst holds UK£6.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | UK£125k | UK£134k | 55% |
| Other | UK£102k | UK£271k | 45% |
| Total Compensation | UK£227k | UK£405k | 100% |
Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. Dewhurst sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Dewhurst plc's Growth Numbers
Dewhurst plc saw earnings per share stay pretty flat over the last three years. In the last year, its revenue is down 1.5%.
The lack of EPS growth is certainly unimpressive. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Dewhurst plc Been A Good Investment?
Most shareholders would probably be pleased with Dewhurst plc for providing a total return of 58% over three years. 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.
To Conclude...
As we noted earlier, Dewhurst pays its CEO in line with similar-sized companies belonging to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We wouldn't say CEO compensation is too high, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Dewhurst (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
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.
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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 AIM:DWHT
Dewhurst Group
Manufactures and sells electrical components and control equipment for industrial and commercial capital goods in the United Kingdom, Europe, the Americas, Asia, Australia, and internationally.
Flawless balance sheet average dividend payer.
