Shareholders May Be Wary Of Increasing XP Power Limited's (LON:XPP) CEO Compensation Package

Key Insights

• XP Power to hold its Annual General Meeting on 26th of April
• Salary of UK£565.0k is part of CEO Gavin Griggs's total remuneration
• The overall pay is 32% above the industry average
• XP Power's three-year loss to shareholders was 78% while its EPS was down 67% over the past three years

The results at XP Power Limited (LON:XPP) have been quite disappointing recently and CEO Gavin Griggs bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 26th of April. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for XP Power

How Does Total Compensation For Gavin Griggs Compare With Other Companies In The Industry?

Our data indicates that XP Power Limited has a market capitalization of UK£248m, and total annual CEO compensation was reported as UK£1.0m for the year to December 2023. Notably, that's an increase of 41% over the year before. We note that the salary of UK£565.0k makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the British Electrical industry with market capitalizations ranging from UK£162m to UK£647m, the reported median CEO total compensation was UK£775k. This suggests that Gavin Griggs is paid more than the median for the industry. What's more, Gavin Griggs holds UK£145k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	UK£565k	UK£537k	55%
Other	UK£461k	UK£193k	45%
Total Compensation	UK£1.0m	UK£730k	100%

Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. Our data reveals that XP Power allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

XP Power Limited's Growth

Over the last three years, XP Power Limited has shrunk its earnings per share by 67% per year. It achieved revenue growth of 9.0% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. 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 XP Power Limited Been A Good Investment?

The return of -78% over three years would not have pleased XP Power Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for XP Power (2 make us uncomfortable!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.