Does John Wood Group PLC’s (LON:WG.) CEO Pay Reflect Performance?

In 2016 Robin Watson was appointed CEO of John Wood Group PLC (LON:WG.). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for John Wood Group

How Does Robin Watson’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that John Wood Group PLC has a market cap of UK£3.7b, and is paying total annual CEO compensation of US$1.4m. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$600k. We looked at a group of companies with market capitalizations from UK£1.6b to UK£5.0b, and the median CEO compensation was UK£2.1m.

A first glance this seems like a real positive for shareholders, since Robin Watson is paid less than the average compensation paid by similar sized companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion. So this free report on the analyst consensus forecasts could help you make a master move on this stock.

You can see a visual representation of the CEO compensation at John Wood Group, below.

LSE:WG. CEO Compensation January 10th 19
LSE:WG. CEO Compensation January 10th 19

Is John Wood Group PLC Growing?

Over the last three years John Wood Group PLC has shrunk its earnings per share by an average of 145% per year. Its revenue is up 114% over last year.

Investors should note that, over three years, earnings per share are down. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching.

Has John Wood Group PLC Been A Good Investment?

John Wood Group PLC has served shareholders reasonably well, with a total return of 20% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

It looks like John Wood Group PLC pays its CEO less than similar sized companies.

Robin Watson is paid less than what is normal at similar size companies, and but overall performance has left me uninspired. But on this analysis I see no issue with the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling John Wood Group shares (free trial).

If you want to buy a stock that is better than John Wood Group, this free list of high return, low debt companies is a great place to look.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.