David O'Connor has been the CEO of Churchill China plc (LON:CHH) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Churchill China.
Check out our latest analysis for Churchill China
How Does Total Compensation For David O'Connor Compare With Other Companies In The Industry?
At the time of writing, our data shows that Churchill China plc has a market capitalization of UK£112m, and reported total annual CEO compensation of UK£810k for the year to December 2019. Notably, that's an increase of 31% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£282k.
On comparing similar-sized companies in the industry with market capitalizations below UK£159m, we found that the median total CEO compensation was UK£385k. Hence, we can conclude that David O'Connor is remunerated higher than the industry median. What's more, David O'Connor holds UK£368k worth of shares in the company in their own name.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | UK£282k | UK£274k | 35% |
| Other | UK£529k | UK£343k | 65% |
| Total Compensation | UK£810k | UK£617k | 100% |
Talking in terms of the industry, salary represented approximately 44% of total compensation out of all the companies we analyzed, while other remuneration made up 56% of the pie. Churchill China pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Churchill China plc's Growth
Churchill China plc has seen its earnings per share (EPS) increase by 20% a year over the past three years. In the last year, its revenue is up 17%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Churchill China plc Been A Good Investment?
Churchill China plc has served shareholders reasonably well, with a total return of 22% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
To Conclude...
As previously discussed, David is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed us with its earnings per share growth, over three years. We also think investor returns are steady over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.
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. We identified 2 warning signs for Churchill China (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
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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About AIM:CHH
Churchill China
Manufactures and sells ceramic and related products in the United Kingdom, rest of Europe, the United States, and internationally.
Flawless balance sheet and fair value.
