In 2017 Paul McDonald was appointed CEO of Avon Rubber p.l.c. (LON:AVON). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Avon Rubber
How Does Paul McDonald's Compensation Compare With Similar Sized Companies?
Our data indicates that Avon Rubber p.l.c. is worth UK£829m, and total annual CEO compensation was reported as UK£772k for the year to September 2019. That's below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at UK£390k. We examined companies with market caps from UK£310m to UK£1.2b, and discovered that the median CEO total compensation of that group was UK£940k.
So Paul McDonald is paid around the average of the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at Avon Rubber, below.
Is Avon Rubber p.l.c. Growing?
On average over the last three years, Avon Rubber p.l.c. has shrunk earnings per share by 9.1% each year (measured with a line of best fit). In the last year, its revenue is up 8.3%.
Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Avon Rubber p.l.c. Been A Good Investment?
Most shareholders would probably be pleased with Avon Rubber p.l.c. for providing a total return of 195% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
Paul McDonald is paid around the same as most CEOs of similar size companies.
We're not seeing great strides in earnings per share, but the company has clearly pleased some investors, given the returns over the last three years. So we think most shareholders wouldn't be too worried about CEO compensation, which is close to the median for similar sized companies. Whatever your view on compensation, you might want to check if insiders are buying or selling Avon Rubber shares (free trial).
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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