It's Unlikely That Man Group plc's (LON:EMG) CEO Will See A Huge Pay Rise This Year

The share price of Man Group plc (LON:EMG) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 07 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Man Group

How Does Total Compensation For Luke Ellis Compare With Other Companies In The Industry?

Our data indicates that Man Group plc has a market capitalization of UK£2.4b, and total annual CEO compensation was reported as US$3.2m for the year to December 2020. We note that's an increase of 12% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

For comparison, other companies in the same industry with market capitalizations ranging between UK£1.4b and UK£4.6b had a median total CEO compensation of US$1.8m. Accordingly, our analysis reveals that Man Group plc pays Luke Ellis north of the industry median. Furthermore, Luke Ellis directly owns UK£10m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$1.1m	US$1.1m	35%
Other	US$2.1m	US$1.7m	65%
Total Compensation	US$3.2m	US$2.8m	100%

On an industry level, roughly 49% of total compensation represents salary and 51% is other remuneration. In Man Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Man Group plc's Growth

Man Group plc has reduced its earnings per share by 15% a year over the last three years. Its revenue is down 16% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Man Group plc Been A Good Investment?

With a total shareholder return of 8.3% over three years, Man Group plc has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may 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. We've identified 2 warning signs for Man Group that investors should be aware of in a dynamic business environment.

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. 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.
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