Here's Why Shareholders Should Examine Mears Group plc's (LON:MER) CEO Compensation Package More Closely

The results at Mears Group plc (LON:MER) have been quite disappointing recently and CEO David Miles bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29 June 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Mears Group

Comparing Mears Group plc's CEO Compensation With the industry

At the time of writing, our data shows that Mears Group plc has a market capitalization of UK£205m, and reported total annual CEO compensation of UK£601k for the year to December 2020. That's a notable increase of 28% on last year. We note that the salary portion, which stands at UK£393.0k constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between UK£72m and UK£286m, we discovered that the median CEO total compensation of that group was UK£205k. Hence, we can conclude that David Miles is remunerated higher than the industry median. Furthermore, David Miles directly owns UK£323k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	UK£393k	UK£387k	65%
Other	UK£208k	UK£82k	35%
Total Compensation	UK£601k	UK£469k	100%

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. Our data reveals that Mears Group 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.

Mears Group plc's Growth

Mears Group plc has reduced its earnings per share by 66% a year over the last three years. It saw its revenue drop 8.6% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Mears Group plc Been A Good Investment?

With a total shareholder return of -44% over three years, Mears Group plc shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Mears Group (free visualization of insider trades).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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