This article will reflect on the compensation paid to Mike Allcock who has served as CEO of FW Thorpe Plc (LON:TFW) since 2010. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for FW Thorpe
How Does Total Compensation For Mike Allcock Compare With Other Companies In The Industry?
Our data indicates that FW Thorpe Plc has a market capitalization of UK£386m, and total annual CEO compensation was reported as UK£399k for the year to June 2020. That's a notable decrease of 40% on last year. Notably, the salary which is UK£213.0k, represents most of the total compensation being paid.
On comparing similar companies from the same industry with market caps ranging from UK£150m to UK£600m, we found that the median CEO total compensation was UK£384k. This suggests that FW Thorpe remunerates its CEO largely in line with the industry average. Moreover, Mike Allcock also holds UK£630k worth of FW Thorpe stock directly under their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | UK£213k | UK£235k | 53% |
| Other | UK£186k | UK£429k | 47% |
| Total Compensation | UK£399k | UK£664k | 100% |
On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. FW Thorpe pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
FW Thorpe Plc's Growth
Over the last three years, FW Thorpe Plc has shrunk its earnings per share by 3.0% per year. In the last year, its revenue is up 2.4%.
Its a bit disappointing to see that the company has failed to grow its EPS. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 FW Thorpe Plc Been A Good Investment?
With a total shareholder return of 8.4% over three years, FW Thorpe Plc has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
As we noted earlier, FW Thorpe pays its CEO in line with similar-sized companies belonging to the same industry. FW Thorpe has had a poor showing when it comes to EPS growth, and it's tough to say that shareholder returns have done much to excite us. This doesn't compare well with CEO compensation, which is largely in line with the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for FW Thorpe that investors should think about before committing capital to this stock.
Important note: FW Thorpe 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 AIM:TFW
FW Thorpe
Designs, manufactures, and supplies professional lighting equipment in the United Kingdom, Ireland, the United Arab Emirates, Australia, the Netherlands, Germany, France, Spain, rest of Europe, and internationally.
Excellent balance sheet, good value and pays a dividend.
