Most Shareholders Will Probably Agree With City of London Investment Group PLC's (LON:CLIG) CEO Compensation

By
Simply Wall St
Published
October 11, 2021
LSE:CLIG
Source: Shutterstock

Under the guidance of CEO Tom Griffith, City of London Investment Group PLC (LON:CLIG) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 18 October 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for City of London Investment Group

How Does Total Compensation For Tom Griffith Compare With Other Companies In The Industry?

Our data indicates that City of London Investment Group PLC has a market capitalization of UK£265m, and total annual CEO compensation was reported as UK£824k for the year to June 2021. We note that's an increase of 77% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£211k.

On examining similar-sized companies in the industry with market capitalizations between UK£147m and UK£587m, we discovered that the median CEO total compensation of that group was UK£794k. From this we gather that Tom Griffith is paid around the median for CEOs in the industry. Moreover, Tom Griffith also holds UK£2.7m worth of City of London Investment Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary UK£211k UK£226k 26%
Other UK£613k UK£239k 74%
Total CompensationUK£824k UK£465k100%

On an industry level, roughly 47% of total compensation represents salary and 53% is other remuneration. It's interesting to note that City of London Investment Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
LSE:CLIG CEO Compensation October 12th 2021

A Look at City of London Investment Group PLC's Growth Numbers

Over the last three years, City of London Investment Group PLC has shrunk its earnings per share by 4.4% per year. It achieved revenue growth of 66% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 City of London Investment Group PLC Been A Good Investment?

Most shareholders would probably be pleased with City of London Investment Group PLC for providing a total return of 71% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The overall company performance has been commendable, however there are still areas for improvement. Still, we think that until shareholders see an improvement in EPS growth, they may find it hard to justify a pay rise for the CEO.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for City of London Investment Group that you should be aware of before investing.

Important note: City of London Investment Group 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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