Here's Why Shareholders May Want To Be Cautious With Increasing XP Factory Plc's (LON:XPF) CEO Pay Packet

Key Insights

• XP Factory's Annual General Meeting to take place on 29th of September
• Salary of UK£247.0k is part of CEO Richard Harpham's total remuneration
• The overall pay is 61% above the industry average
• XP Factory's three-year loss to shareholders was 2.0% while its EPS grew by 49% over the past three years

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As many shareholders of XP Factory Plc (LON:XPF) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 29th of September could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for XP Factory

How Does Total Compensation For Richard Harpham Compare With Other Companies In The Industry?

At the time of writing, our data shows that XP Factory Plc has a market capitalization of UK£21m, and reported total annual CEO compensation of UK£337k for the year to March 2025. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at UK£247.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the British Hospitality industry with market capitalizations below UK£148m, we found that the median total CEO compensation was UK£209k. Accordingly, our analysis reveals that XP Factory Plc pays Richard Harpham north of the industry median. What's more, Richard Harpham holds UK£119k worth of shares in the company in their own name.

On an industry level, roughly 44% of total compensation represents salary and 56% is other remuneration. XP Factory is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at XP Factory Plc's Growth Numbers

XP Factory Plc has seen its earnings per share (EPS) increase by 49% a year over the past three years. It achieved revenue growth of 26% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 XP Factory Plc Been A Good Investment?

Since shareholders would have lost about 2.0% over three years, some XP Factory Plc investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for XP Factory that investors should think about before committing capital to this stock.

Important note: XP Factory is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.