Should Shareholders Worry About John Wood Group PLC's (LON:WG.) CEO Compensation Package?

Performance at John Wood Group PLC (LON:WG.) has not been particularly rosy recently and shareholders will likely be holding CEO Robin Watson and the board accountable for this. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 13 May 2021. The data we gathered below shows that CEO compensation looks acceptable for now.

View our latest analysis for John Wood Group

How Does Total Compensation For Robin Watson Compare With Other Companies In The Industry?

According to our data, John Wood Group PLC has a market capitalization of UK£1.9b, and paid its CEO total annual compensation worth US$1.7m over the year to December 2020. We note that's a decrease of 26% compared to last year. In particular, the salary of US$993.9k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from UK£1.4b to UK£4.6b, we found that the median CEO total compensation was US$3.1m. In other words, John Wood Group pays its CEO lower than the industry median. What's more, Robin Watson holds UK£1.0m worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	US$994k	US$993k	60%
Other	US$664k	US$1.2m	40%
Total Compensation	US$1.7m	US$2.2m	100%

Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. Our data reveals that John Wood Group allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at John Wood Group PLC's Growth Numbers

Over the last three years, John Wood Group PLC has not seen its earnings per share change much, though they have deteriorated slightly. Its revenue is down 23% over the previous year.

A lack of EPS improvement is not good to see. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 John Wood Group PLC Been A Good Investment?

Few John Wood Group PLC shareholders would feel satisfied with the return of -54% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at John Wood Group.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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