Should Shareholders Reconsider Vp plc's (LON:VP.) CEO Compensation Package?

Shareholders will probably not be too impressed with the underwhelming results at Vp plc (LON:VP.) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 22 July 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Vp

How Does Total Compensation For Neil Stothard Compare With Other Companies In The Industry?

Our data indicates that Vp plc has a market capitalization of UK£364m, and total annual CEO compensation was reported as UK£721k for the year to March 2021. That's a modest increase of 3.1% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£351k.

For comparison, other companies in the same industry with market capitalizations ranging between UK£144m and UK£577m had a median total CEO compensation of UK£721k. This suggests that Vp remunerates its CEO largely in line with the industry average. Furthermore, Neil Stothard directly owns UK£7.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	UK£351k	UK£366k	49%
Other	UK£370k	UK£333k	51%
Total Compensation	UK£721k	UK£699k	100%

Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. In Vp's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Vp plc's Growth Numbers

Vp plc has reduced its earnings per share by 64% a year over the last three years. In the last year, its revenue is down 15%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. 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 Vp plc Been A Good Investment?

Given the total shareholder loss of 12% over three years, many shareholders in Vp plc are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Vp you should be aware of, and 2 of them are a bit concerning.

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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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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