Stock Analysis

How Does Eurocell's (LON:ECEL) CEO Pay Compare With Company Performance?

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This article will reflect on the compensation paid to Mark Kelly who has served as CEO of Eurocell plc (LON:ECEL) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Eurocell.

Check out our latest analysis for Eurocell

Comparing Eurocell plc's CEO Compensation With the industry

According to our data, Eurocell plc has a market capitalization of UK£228m, and paid its CEO total annual compensation worth UK£673k over the year to December 2019. We note that's an increase of 47% above last year. In particular, the salary of UK£389.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from UK£151m to UK£604m, we found that the median CEO total compensation was UK£666k. This suggests that Eurocell remunerates its CEO largely in line with the industry average. Moreover, Mark Kelly also holds UK£278k worth of Eurocell stock directly under their own name.

Component20192018Proportion (2019)
Salary UK£389k UK£372k 58%
Other UK£284k UK£87k 42%
Total CompensationUK£673k UK£459k100%

On an industry level, around 64% of total compensation represents salary and 36% is other remuneration. Our data reveals that Eurocell allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

LSE:ECEL CEO Compensation November 18th 2020

Eurocell plc's Growth

Eurocell plc has reduced its earnings per share by 23% a year over the last three years. It saw its revenue drop 13% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Eurocell plc Been A Good Investment?

Eurocell plc has served shareholders reasonably well, with a total return of 12% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As we touched on above, Eurocell plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Eurocell has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is close to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.

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've identified 1 warning sign for Eurocell that investors should be aware of in a dynamic business environment.

Important note: Eurocell is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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