Does Spire Healthcare Group's (LON:SPI) CEO Salary Compare Well With The Performance Of The Company?

Justin Ash has been the CEO of Spire Healthcare Group plc (LON:SPI) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Spire Healthcare Group.

See our latest analysis for Spire Healthcare Group

How Does Total Compensation For Justin Ash Compare With Other Companies In The Industry?

Our data indicates that Spire Healthcare Group plc has a market capitalization of UK£641m, and total annual CEO compensation was reported as UK£1.0m for the year to December 2019. That's a notable increase of 38% on last year. In particular, the salary of UK£615.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between UK£295m and UK£1.2b had a median total CEO compensation of UK£590k. Accordingly, our analysis reveals that Spire Healthcare Group plc pays Justin Ash north of the industry median. Furthermore, Justin Ash directly owns UK£631k worth of shares in the company.

On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. Spire Healthcare Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Spire Healthcare Group plc's Growth Numbers

Over the last three years, Spire Healthcare Group plc has shrunk its earnings per share by 143% per year. It saw its revenue drop 5.9% over the last 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. 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 Spire Healthcare Group plc Been A Good Investment?

With a three year total loss of 34% for the shareholders, Spire Healthcare Group plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Spire Healthcare Group plc is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Spire Healthcare Group (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Spire Healthcare 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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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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