Stock Analysis

Increases to CEO Compensation Might Be Put On Hold For Now at Ultra Electronics Holdings plc (LON:ULE)

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Under the guidance of CEO Simon Pryce, Ultra Electronics Holdings plc (LON:ULE) has performed reasonably well recently. As shareholders go into the upcoming AGM on 12 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Ultra Electronics Holdings

How Does Total Compensation For Simon Pryce Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ultra Electronics Holdings plc has a market capitalization of UK£1.4b, and reported total annual CEO compensation of UK£3.1m for the year to December 2020. That's a notable increase of 95% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£677k.

In comparison with other companies in the industry with market capitalizations ranging from UK£719m to UK£2.3b, the reported median CEO total compensation was UK£1.4m. Accordingly, our analysis reveals that Ultra Electronics Holdings plc pays Simon Pryce north of the industry median. Furthermore, Simon Pryce directly owns UK£542k worth of shares in the company.

Component20202019Proportion (2020)
Salary UK£677k UK£665k 22%
Other UK£2.4m UK£927k 78%
Total CompensationUK£3.1m UK£1.6m100%

On an industry level, around 48% of total compensation represents salary and 52% is other remuneration. Ultra Electronics Holdings 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.

LSE:ULE CEO Compensation May 6th 2021

Ultra Electronics Holdings plc's Growth

Ultra Electronics Holdings plc's earnings per share (EPS) grew 21% per year over the last three years. It achieved revenue growth of 4.2% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Ultra Electronics Holdings plc Been A Good Investment?

We think that the total shareholder return of 45%, over three years, would leave most Ultra Electronics Holdings plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

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

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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