A Quick Analysis On Keystone Law Group's (LON:KEYS) CEO Compensation

James Knight is the CEO of Keystone Law Group plc (LON:KEYS), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. 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 Keystone Law Group

How Does Total Compensation For James Knight Compare With Other Companies In The Industry?

According to our data, Keystone Law Group plc has a market capitalization of UK£148m, and paid its CEO total annual compensation worth UK£322k over the year to January 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at UK£310.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from UK£76m to UK£303m, the reported median CEO total compensation was UK£310k. So it looks like Keystone Law Group compensates James Knight in line with the median for the industry. Moreover, James Knight also holds UK£50m worth of Keystone Law Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Keystone Law Group has gone down a largely traditional route, paying James Knight a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Keystone Law Group plc's Growth

Keystone Law Group plc has reduced its earnings per share by 71% a year over the last three years. It achieved revenue growth of 12% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Keystone Law Group plc Been A Good Investment?

Most shareholders would probably be pleased with Keystone Law Group plc for providing a total return of 163% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

James receives almost all of their compensation through a salary. As previously discussed, James is compensated close to the median for companies of its size, and which belong to the same industry. Some investors may take issue with this, especially considering shrinking EPS for the past three years. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We do not think CEO compensation is a problem, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Keystone Law Group that investors should look into moving forward.

Important note: Keystone Law Group 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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