Here's What We Learned About The CEO Pay At Norcros plc (LON:NXR)

This article will reflect on the compensation paid to Nick Kelsall who has served as CEO of Norcros plc (LON:NXR) since 2011. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Norcros

Comparing Norcros plc's CEO Compensation With the industry

Our data indicates that Norcros plc has a market capitalization of UK£161m, and total annual CEO compensation was reported as UK£592k for the year to March 2020. Notably, that's a decrease of 39% over the year before. In particular, the salary of UK£377.2k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between UK£74m and UK£295m, we discovered that the median CEO total compensation of that group was UK£554k. This suggests that Norcros remunerates its CEO largely in line with the industry average. What's more, Nick Kelsall holds UK£3.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 64% of total compensation out of all the companies we analyzed, while other remuneration made up 36% of the pie. Although there is a difference in how total compensation is set, Norcros more or less reflects the market in terms of setting the salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Norcros plc's Growth

Over the last three years, Norcros plc has shrunk its earnings per share by 32% per year. In the last year, its revenue is down 15%.

Few shareholders would be pleased to read that EPS have declined. 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. 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 Norcros plc Been A Good Investment?

Norcros plc has generated a total shareholder return of 20% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we noted earlier, Norcros pays its CEO in line with similar-sized companies belonging to the same industry. According to our analysis, Norcros is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. These figures do not go well against CEO compensation, which is more or less equal to the industry median. Considering all of this, we can't say the CEO is underpaid, and moving forward shareholders will likely want to see higher growth to justify any raise.

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 4 warning signs for Norcros that investors should be aware of in a dynamic business environment.

Important note: Norcros 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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