We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Costain Group PLC's (LON:COST) CEO For Now

Key Insights

• Costain Group to hold its Annual General Meeting on 16th of May
• Salary of UK£463.2k is part of CEO Alex Vaughan's total remuneration
• The overall pay is 107% above the industry average
• Over the past three years, Costain Group's EPS grew by 124% and over the past three years, the total shareholder return was 48%

CEO Alex Vaughan has done a decent job of delivering relatively good performance at Costain Group PLC (LON:COST) recently. As shareholders go into the upcoming AGM on 16th of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Costain Group

How Does Total Compensation For Alex Vaughan Compare With Other Companies In The Industry?

Our data indicates that Costain Group PLC has a market capitalization of UK£231m, and total annual CEO compensation was reported as UK£1.4m for the year to December 2023. We note that's an increase of 12% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£463k.

For comparison, other companies in the British Construction industry with market capitalizations ranging between UK£80m and UK£319m had a median total CEO compensation of UK£655k. This suggests that Alex Vaughan is paid more than the median for the industry. Moreover, Alex Vaughan also holds UK£474k worth of Costain Group stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	UK£463k	UK£443k	34%
Other	UK£895k	UK£774k	66%
Total Compensation	UK£1.4m	UK£1.2m	100%

On an industry level, around 35% of total compensation represents salary and 65% is other remuneration. Although there is a difference in how total compensation is set, Costain Group more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Costain Group PLC's Growth Numbers

Costain Group PLC's earnings per share (EPS) grew 124% per year over the last three years. In the last year, its revenue is down 6.3%.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 Costain Group PLC Been A Good Investment?

Most shareholders would probably be pleased with Costain Group PLC for providing a total return of 48% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Costain Group that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.