J D Wetherspoon plc's (LON:JDW) CEO Will Probably Find It Hard To See A Huge Raise This Year

Key Insights

• J D Wetherspoon's Annual General Meeting to take place on 16th of November
• CEO John Hutson's total compensation includes salary of UK£638.0k
• Total compensation is similar to the industry average
• J D Wetherspoon's three-year loss to shareholders was 34% while its EPS grew by 88% over the past three years

Shareholders of J D Wetherspoon plc (LON:JDW) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 16th of November could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for J D Wetherspoon

Comparing J D Wetherspoon plc's CEO Compensation With The Industry

According to our data, J D Wetherspoon plc has a market capitalization of UK£850m, and paid its CEO total annual compensation worth UK£1.1m over the year to July 2023. That's a modest increase of 5.4% on the prior year. We note that the salary of UK£638.0k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar companies from the British Hospitality industry with market caps ranging from UK£326m to UK£1.3b, we found that the median CEO total compensation was UK£871k. From this we gather that John Hutson is paid around the median for CEOs in the industry. Moreover, John Hutson also holds UK£1.4m worth of J D Wetherspoon stock directly under their own name.

On an industry level, roughly 58% of total compensation represents salary and 42% is other remuneration. There isn't a significant difference between J D Wetherspoon and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at J D Wetherspoon plc's Growth Numbers

Over the past three years, J D Wetherspoon plc has seen its earnings per share (EPS) grow by 88% per year. Its revenue is up 11% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has J D Wetherspoon plc Been A Good Investment?

The return of -34% over three years would not have pleased J D Wetherspoon plc shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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. In our study, we found 2 warning signs for J D Wetherspoon you should be aware of, and 1 of them doesn't sit too well with us.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.