What Can We Learn About PHSC's (LON:PHSC) CEO Compensation?

The CEO of PHSC plc (LON:PHSC) is Stephen King, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for PHSC

Comparing PHSC plc's CEO Compensation With the industry

Our data indicates that PHSC plc has a market capitalization of UK£1.8m, and total annual CEO compensation was reported as UK£93k for the year to March 2020. We note that's a small decrease of 3.4% on last year. We note that the salary portion, which stands at UK£90.8k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under UK£150m, the reported median total CEO compensation was UK£196k. Accordingly, PHSC pays its CEO under the industry median. What's more, Stephen King holds UK£399k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. PHSC has gone down a largely traditional route, paying Stephen King a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at PHSC plc's Growth Numbers

Over the past three years, PHSC plc has seen its earnings per share (EPS) grow by 78% per year. It saw its revenue drop 21% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has PHSC plc Been A Good Investment?

With a total shareholder return of 23% over three years, PHSC plc shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

PHSC pays its CEO a majority of compensation through a salary. As we noted earlier, PHSC pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But over the last three years, EPS growth has been growing rapidly, which is a great sign for the company. Unfortunately, although shareholder returns are growing, they haven't impressed us as much in comparison, over the same period. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. As a result of these considerations, CEO compensation seems quite appropriate.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for PHSC (1 is a bit concerning!) that you should be aware of before investing here.

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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