This Is Why Norman Broadbent plc's (LON:NBB) CEO Compensation Looks Appropriate

Shareholders may be wondering what CEO Mike Brennan plans to do to improve the less than great performance at Norman Broadbent plc (LON:NBB) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 25 June 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Norman Broadbent

How Does Total Compensation For Mike Brennan Compare With Other Companies In The Industry?

According to our data, Norman Broadbent plc has a market capitalization of UK£4.4m, and paid its CEO total annual compensation worth UK£201k over the year to December 2020. We note that's a decrease of 31% compared to last year. We note that the salary portion, which stands at UK£184.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below UK£145m, we found that the median total CEO compensation was UK£430k. In other words, Norman Broadbent pays its CEO lower than the industry median. Furthermore, Mike Brennan directly owns UK£90k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	UK£184k	UK£185k	92%
Other	UK£17k	UK£107k	8%
Total Compensation	UK£201k	UK£292k	100%

Speaking on an industry level, nearly 85% of total compensation represents salary, while the remainder of 15% is other remuneration. Our data reveals that Norman Broadbent allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Norman Broadbent plc's Growth Numbers

Norman Broadbent plc's earnings per share (EPS) grew 84% per year over the last three years. In the last year, its revenue is down 32%.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Norman Broadbent plc Been A Good Investment?

With a three year total loss of 24% for the shareholders, Norman Broadbent plc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Norman Broadbent (1 doesn't sit too well with us!) that you should be aware of before investing here.

Switching gears from Norman Broadbent, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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