In 2016 R. Smith was appointed CEO of 1pm plc (LON:OPM). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does R. Smith’s Compensation Compare With Similar Sized Companies?
According to our data, 1pm plc has a market capitalization of UK£22m, and pays its CEO total annual compensation worth UK£371k. (This figure is for the year to May 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at UK£200k. We took a group of companies with market capitalizations below UK£165m, and calculated the median CEO total compensation to be UK£250k.
It would therefore appear that 1pm plc pays R. Smith more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at 1pm has changed over time.
Is 1pm plc Growing?
Over the last three years 1pm plc has grown its earnings per share (EPS) by an average of 14% per year (using a line of best fit). Its revenue is up 40% over last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see.
Has 1pm plc Been A Good Investment?
With a three year total loss of 60%, 1pm plc would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We examined the amount 1pm plc pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shareholders may want to check for free if 1pm insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at email@example.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.