Increases to CEO Compensation Might Be Put On Hold For Now at discoverIE Group plc (LON:DSCV)

Despite strong share price growth of 136% for discoverIE Group plc (LON:DSCV) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 29 July 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for discoverIE Group

Comparing discoverIE Group plc's CEO Compensation With the industry

Our data indicates that discoverIE Group plc has a market capitalization of UK£862m, and total annual CEO compensation was reported as UK£1.7m for the year to March 2021. We note that's a decrease of 18% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£443k.

On examining similar-sized companies in the industry with market capitalizations between UK£291m and UK£1.2b, we discovered that the median CEO total compensation of that group was UK£699k. This suggests that Nick Jefferies is paid more than the median for the industry. What's more, Nick Jefferies holds UK£9.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	UK£443k	UK£467k	26%
Other	UK£1.3m	UK£1.6m	74%
Total Compensation	UK£1.7m	UK£2.1m	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. It's interesting to note that discoverIE Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

discoverIE Group plc's Growth

Over the last three years, discoverIE Group plc has shrunk its earnings per share by 3.3% per year. It saw its revenue drop 2.6% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has discoverIE Group plc Been A Good Investment?

Boasting a total shareholder return of 136% over three years, discoverIE Group plc has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same 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 returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

Whatever your view on compensation, you might want to check if insiders are buying or selling discoverIE Group shares (free trial).

Switching gears from discoverIE Group, 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.

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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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