Is Coats Group plc’s (LON:COA) CEO Overpaid Relative To Its Peers?

In 2017 Rajiv Sharma was appointed CEO of Coats Group plc (LON:COA). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Coats Group

How Does Rajiv Sharma’s Compensation Compare With Similar Sized Companies?

Our data indicates that Coats Group plc is worth UK£1.1b, and total annual CEO compensation was reported as US$3.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$586k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from UK£782m to UK£2.5b, and discovered that the median CEO total compensation of that group was UK£1.4m.

As you can see, Rajiv Sharma is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Coats Group plc is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. You might want to check this free visual report on analyst forecasts for future earnings.

You can see a visual representation of the CEO compensation at Coats Group, below.

LSE:COA CEO Compensation, November 9th 2019
LSE:COA CEO Compensation, November 9th 2019

Is Coats Group plc Growing?

On average over the last three years, Coats Group plc has grown earnings per share (EPS) by 1.3% each year (using a line of best fit). It achieved revenue growth of 4.0% over the last year.

I would argue that the improvement in revenue isn’t particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise.

Has Coats Group plc Been A Good Investment?

Boasting a total shareholder return of 101% over three years, Coats Group plc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We compared the total CEO remuneration paid by Coats Group plc, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Coats Group shares (free trial).

Important note: Coats Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.