Stock Analysis

What Can We Conclude About Intertek Group's (LON:ITRK) CEO Pay?

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LSE:ITRK
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This article will reflect on the compensation paid to André Pierre Lacroix who has served as CEO of Intertek Group plc (LON:ITRK) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Intertek Group.

See our latest analysis for Intertek Group

How Does Total Compensation For André Pierre Lacroix Compare With Other Companies In The Industry?

According to our data, Intertek Group plc has a market capitalization of UK£9.5b, and paid its CEO total annual compensation worth UK£5.4m over the year to December 2019. We note that's a decrease of 15% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£964k.

For comparison, other companies in the industry with market capitalizations above UK£5.9b, reported a median total CEO compensation of UK£6.4m. This suggests that Intertek Group remunerates its CEO largely in line with the industry average. Moreover, André Pierre Lacroix also holds UK£25m worth of Intertek Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary UK£964k UK£945k 18%
Other UK£4.4m UK£5.4m 82%
Total CompensationUK£5.4m UK£6.3m100%

On an industry level, roughly 80% of total compensation represents salary and 20% is other remuneration. It's interesting to note that Intertek Group allocates a smaller portion of compensation to salary 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.

ceo-compensation
LSE:ITRK CEO Compensation December 20th 2020

Intertek Group plc's Growth

Intertek Group plc has reduced its earnings per share by 1.3% a year over the last three years. In the last year, its revenue changed by just 0.7%.

Its a bit disappointing to see that the company has failed to grow its EPS. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Intertek Group plc Been A Good Investment?

Intertek Group plc has generated a total shareholder return of 20% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we noted earlier, Intertek Group pays its CEO in line with similar-sized companies belonging to the same industry. Intertek Group has had a poor showing when it comes to EPS growth, and it's tough to say that shareholder returns have done much to excite us. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Intertek Group that investors should think about before committing capital to this stock.

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