We Take A Look At Why Focusrite plc's (LON:TUNE) CEO Compensation Is Well Earned

It would be hard to discount the role that CEO Tim Carroll has played in delivering the impressive results at Focusrite plc (LON:TUNE) recently. Coming up to the next AGM on 17 December 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

Check out our latest analysis for Focusrite

Comparing Focusrite plc's CEO Compensation With the industry

According to our data, Focusrite plc has a market capitalization of UK£929m, and paid its CEO total annual compensation worth UK£695k over the year to August 2021. That's just a smallish increase of 4.2% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£291k.

On comparing similar companies from the same industry with market caps ranging from UK£756m to UK£2.4b, we found that the median CEO total compensation was UK£583k. This suggests that Focusrite remunerates its CEO largely in line with the industry average. Moreover, Tim Carroll also holds UK£1.3m worth of Focusrite stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	UK£291k	UK£285k	42%
Other	UK£404k	UK£382k	58%
Total Compensation	UK£695k	UK£667k	100%

Talking in terms of the industry, salary represented approximately 54% of total compensation out of all the companies we analyzed, while other remuneration made up 46% of the pie. In Focusrite's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Focusrite plc's Growth

Focusrite plc's earnings per share (EPS) grew 38% per year over the last three years. It achieved revenue growth of 34% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Focusrite plc Been A Good Investment?

Most shareholders would probably be pleased with Focusrite plc for providing a total return of 259% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Focusrite (1 shouldn't be ignored!) 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.

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.