How Is Serco Group's (LON:SRP) CEO Compensated?

Rupert Soames has been the CEO of Serco Group plc (LON:SRP) since 2014, and this article will examine the executive's compensation 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.

View our latest analysis for Serco Group

How Does Total Compensation For Rupert Soames Compare With Other Companies In The Industry?

According to our data, Serco Group plc has a market capitalization of UK£1.4b, and paid its CEO total annual compensation worth UK£5.7m over the year to December 2019. We note that's an increase of 10% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£850k.

For comparison, other companies in the same industry with market capitalizations ranging between UK£750m and UK£2.4b had a median total CEO compensation of UK£2.1m. This suggests that Rupert Soames is paid more than the median for the industry. Furthermore, Rupert Soames directly owns UK£5.4m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 56% of total compensation represents salary and 44% is other remuneration. Serco Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Serco Group plc's Growth

Over the past three years, Serco Group plc has seen its earnings per share (EPS) grow by 88% per year. In the last year, its revenue is up 22%.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Serco Group plc Been A Good Investment?

Serco Group plc has generated a total shareholder return of 28% 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 previously discussed, Rupert is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth over three years is certainly impressive. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Serco Group that investors should look into moving forward.

Switching gears from Serco Group, 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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