Shareholders May Find It Hard To Justify Increasing Verditek PLC's (LON:VDTK) CEO Compensation For Now

Key Insights

• Verditek will host its Annual General Meeting on 21st of December
• Total pay for CEO Rob Richards includes UK£152.0k salary
• Total compensation is similar to the industry average
• Verditek's EPS grew by 32% over the past three years while total shareholder loss over the past three years was 97%

Shareholders of Verditek PLC (LON:VDTK) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 21st of December could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Verditek

Comparing Verditek PLC's CEO Compensation With The Industry

At the time of writing, our data shows that Verditek PLC has a market capitalization of UK£1.1m, and reported total annual CEO compensation of UK£237k for the year to December 2022. That's a notable increase of 28% on last year. We note that the salary portion, which stands at UK£152.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the British Commercial Services industry with market capitalizations below UK£157m, reported a median total CEO compensation of UK£288k. So it looks like Verditek compensates Rob Richards in line with the median for the industry.

Component	2022	2021	Proportion (2022)
Salary	UK£152k	UK£151k	64%
Other	UK£85k	UK£34k	36%
Total Compensation	UK£237k	UK£185k	100%

Speaking on an industry level, nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. Our data reveals that Verditek allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Verditek PLC's Growth

Verditek PLC has seen its earnings per share (EPS) increase by 32% a year over the past three years. In the last year, its revenue is up 173%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Verditek PLC Been A Good Investment?

The return of -97% over three years would not have pleased Verditek PLC shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for Verditek you should be aware of, and 4 of them are potentially serious.

Switching gears from Verditek, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.