What Can We Make Of Walker Crips Group's (LON:WCW) CEO Compensation?

By
Simply Wall St
Published
February 14, 2021
LSE:WCW
Source: Shutterstock

This article will reflect on the compensation paid to Sean Lam who has served as CEO of Walker Crips Group plc (LON:WCW) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Walker Crips Group.

View our latest analysis for Walker Crips Group

How Does Total Compensation For Sean Lam Compare With Other Companies In The Industry?

According to our data, Walker Crips Group plc has a market capitalization of UK£11m, and paid its CEO total annual compensation worth UK£246k over the year to March 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of UK£220.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under UK£144m, the reported median total CEO compensation was UK£240k. So it looks like Walker Crips Group compensates Sean Lam in line with the median for the industry. What's more, Sean Lam holds UK£161k worth of shares in the company in their own name.

Component20202019Proportion (2020)
Salary UK£220k UK£220k 90%
Other UK£26k UK£26k 10%
Total CompensationUK£246k UK£246k100%

On an industry level, roughly 49% of total compensation represents salary and 51% is other remuneration. According to our research, Walker Crips Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
LSE:WCW CEO Compensation February 15th 2021

A Look at Walker Crips Group plc's Growth Numbers

Over the last three years, Walker Crips Group plc has shrunk its earnings per share by 36% per year. In the last year, its revenue is down 2.8%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Walker Crips Group plc Been A Good Investment?

With a three year total loss of 26% for the shareholders, Walker Crips Group plc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Walker Crips Group plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Walker Crips Group (1 is significant!) that you should be aware of before investing here.

Switching gears from Walker Crips Group, 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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