Most Shareholders Will Probably Find That The Compensation For FW Thorpe Plc's (LON:TFW) CEO Is Reasonable

Performance at FW Thorpe Plc (LON:TFW) has been rather uninspiring recently and shareholders may be wondering how CEO Mike Allcock plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 18 November 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for FW Thorpe

Comparing FW Thorpe Plc's CEO Compensation With the industry

Our data indicates that FW Thorpe Plc has a market capitalization of UK£515m, and total annual CEO compensation was reported as UK£431k for the year to June 2021. That's a notable increase of 8.0% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£213k.

In comparison with other companies in the industry with market capitalizations ranging from UK£299m to UK£1.2b, the reported median CEO total compensation was UK£699k. This suggests that Mike Allcock is paid below the industry median. What's more, Mike Allcock holds UK£843k worth of shares in the company in their own name.

Component	2021	2020	Proportion (2021)
Salary	UK£213k	UK£213k	49%
Other	UK£218k	UK£186k	51%
Total Compensation	UK£431k	UK£399k	100%

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. It's interesting to note that FW Thorpe 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.

FW Thorpe Plc's Growth

Over the last three years, FW Thorpe Plc has not seen its earnings per share change much, though they have deteriorated slightly. In the last year, its revenue is up 4.0%.

A lack of EPS improvement is not good to see. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has FW Thorpe Plc Been A Good Investment?

We think that the total shareholder return of 62%, over three years, would leave most FW Thorpe Plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

So you may want to check if insiders are buying FW Thorpe shares with their own money (free access).

Switching gears from FW Thorpe, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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