Here's Why Shareholders May Want To Be Cautious With Increasing Speedy Hire Plc's (LON:SDY) CEO Pay Packet

The share price of Speedy Hire Plc (LON:SDY) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 09 September 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. 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.

See our latest analysis for Speedy Hire

How Does Total Compensation For Russell Down Compare With Other Companies In The Industry?

According to our data, Speedy Hire Plc has a market capitalization of UK£362m, and paid its CEO total annual compensation worth UK£790k over the year to March 2021. We note that's an increase of 16% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£368k.

On comparing similar companies from the same industry with market caps ranging from UK£145m to UK£579m, we found that the median CEO total compensation was UK£484k. This suggests that Russell Down is paid more than the median for the industry. Furthermore, Russell Down directly owns UK£220k worth of shares in the company.

Component	2021	2020	Proportion (2021)
Salary	UK£368k	UK£388k	47%
Other	UK£422k	UK£295k	53%
Total Compensation	UK£790k	UK£683k	100%

Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. Speedy Hire pays a modest slice of remuneration through salary, as compared 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.

Speedy Hire Plc's Growth

Over the last three years, Speedy Hire Plc has shrunk its earnings per share by 47% per year. In the last year, its revenue is down 11%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Speedy Hire Plc Been A Good Investment?

Speedy Hire Plc has served shareholders reasonably well, with a total return of 27% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. 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.

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 3 warning signs for Speedy Hire that investors should look into moving forward.

Important note: Speedy Hire 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.
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