How Is Ilika's (LON:IKA) CEO Compensated?

The CEO of Ilika plc (LON:IKA) is Graeme Purdy, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Ilika pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Ilika

How Does Total Compensation For Graeme Purdy Compare With Other Companies In The Industry?

Our data indicates that Ilika plc has a market capitalization of UK£304m, and total annual CEO compensation was reported as UK£266k for the year to April 2020. We note that's a small decrease of 5.6% on last year. Notably, the salary which is UK£204.0k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from UK£146m to UK£586m, we found that the median CEO total compensation was UK£357k. This suggests that Ilika remunerates its CEO largely in line with the industry average. Moreover, Graeme Purdy also holds UK£1.6m worth of Ilika stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

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. Ilika is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Ilika plc's Growth Numbers

Ilika plc has seen its earnings per share (EPS) increase by 22% a year over the past three years. In the last year, its revenue is up 9.6%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Ilika plc Been A Good Investment?

Boasting a total shareholder return of 951% over three years, Ilika 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.

To Conclude...

As previously discussed, Graeme is compensated close to the median for companies of its size, and which belong to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Graeme is compensated rather modestly, given the solid company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Ilika that investors should think about before committing capital to this 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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