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 21st of November
• Salary of UK£677.0k is part of CEO John Hutson's total remuneration
• The total compensation is similar to the average for the industry
• J D Wetherspoon's EPS grew by 104% over the past three years while total shareholder loss over the past three years was 33%

The underwhelming share price performance of J D Wetherspoon plc (LON:JDW) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 21st of November. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for J D Wetherspoon

How Does Total Compensation For John Hutson Compare With Other Companies In The Industry?

At the time of writing, our data shows that J D Wetherspoon plc has a market capitalization of UK£733m, and reported total annual CEO compensation of UK£1.1m for the year to July 2024. Notably, that's a decrease of 32% over the year before. In particular, the salary of UK£677.0k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the British Hospitality industry with market capitalizations between UK£315m and UK£1.3b, we discovered that the median CEO total compensation of that group was UK£1.1m. From this we gather that John Hutson is paid around the median for CEOs in the industry. What's more, John Hutson holds UK£1.4m worth of shares in the company in their own name.

Component	2024	2023	Proportion (2024)
Salary	UK£677k	UK£638k	60%
Other	UK£443k	UK£1.0m	40%
Total Compensation	UK£1.1m	UK£1.7m	100%

Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. According to our research, J D Wetherspoon has allocated a higher percentage of pay to salary in comparison to the wider industry. 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 104% per year. Its revenue is up 5.8% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 J D Wetherspoon plc Been A Good Investment?

The return of -33% over three years would not have pleased J D Wetherspoon plc shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for J D Wetherspoon (1 is potentially serious!) that you should be aware of before investing here.

Switching gears from J D Wetherspoon, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.