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

Shareholders of Kier Group plc (LON:KIE) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 17 November 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out the opportunities and risks within the GB Construction industry.

How Does Total Compensation For Andrew O. Davies Compare With Other Companies In The Industry?

According to our data, Kier Group plc has a market capitalization of UK£268m, and paid its CEO total annual compensation worth UK£2.2m over the year to June 2022. Notably, that's an increase of 70% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£750k.

In comparison with other companies in the industry with market capitalizations ranging from UK£172m to UK£686m, the reported median CEO total compensation was UK£1.7m. Hence, we can conclude that Andrew O. Davies is remunerated higher than the industry median. What's more, Andrew O. Davies holds UK£627k worth of shares in the company in their own name.

Component	2022	2021	Proportion (2022)
Salary	UK£750k	UK£595k	33%
Other	UK£1.5m	UK£728k	67%
Total Compensation	UK£2.2m	UK£1.3m	100%

Talking in terms of the industry, salary represented approximately 44% of total compensation out of all the companies we analyzed, while other remuneration made up 56% of the pie. It's interesting to note that Kier Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Kier Group plc's Growth

Over the past three years, Kier Group plc has seen its earnings per share (EPS) grow by 98% per year. In the last year, its revenue is down 3.6%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Kier Group plc Been A Good Investment?

Since shareholders would have lost about 20% over three years, some Kier Group plc investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Kier Group that you should be aware of before investing.

Important note: Kier Group 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. 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.