DCC plc's (LON:DCC) CEO Will Probably Find It Hard To See A Huge Raise This Year

In the past three years, the share price of DCC plc (LON:DCC) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 16 July 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for DCC

Comparing DCC plc's CEO Compensation With the industry

According to our data, DCC plc has a market capitalization of UK£5.9b, and paid its CEO total annual compensation worth UK£3.2m over the year to March 2021. We note that's an increase of 38% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£730k.

On examining similar-sized companies in the industry with market capitalizations between UK£2.9b and UK£8.7b, we discovered that the median CEO total compensation of that group was UK£2.5m. So it looks like DCC compensates Donal Murphy in line with the median for the industry. Moreover, Donal Murphy also holds UK£8.3m worth of DCC stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	UK£730k	UK£756k	23%
Other	UK£2.4m	UK£1.6m	77%
Total Compensation	UK£3.2m	UK£2.3m	100%

On an industry level, roughly 44% of total compensation represents salary and 56% is other remuneration. DCC sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at DCC plc's Growth Numbers

DCC plc's earnings per share (EPS) grew 4.6% per year over the last three years. It saw its revenue drop 9.1% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 DCC plc Been A Good Investment?

Since shareholders would have lost about 11% over three years, some DCC plc investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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. We did our research and spotted 1 warning sign for DCC that investors should look into moving forward.

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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