A Look At Applied Graphene Materials' (LON:AGM) CEO Remuneration

Hugh Potts became the CEO of Applied Graphene Materials plc (LON:AGM) in 2018, and we think it's a good time to look at 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.

Check out our latest analysis for Applied Graphene Materials

How Does Total Compensation For Hugh Potts Compare With Other Companies In The Industry?

At the time of writing, our data shows that Applied Graphene Materials plc has a market capitalization of UK£26m, and reported total annual CEO compensation of UK£295k for the year to July 2020. That's just a smallish increase of 6.5% on last year. Notably, the salary which is UK£183.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under UK£143m, the reported median total CEO compensation was UK£217k. Accordingly, our analysis reveals that Applied Graphene Materials plc pays Hugh Potts north of the industry median. Moreover, Hugh Potts also holds UK£43k worth of Applied Graphene Materials stock directly under their own name.

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Although there is a difference in how total compensation is set, Applied Graphene Materials more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Applied Graphene Materials plc's Growth

Over the past three years, Applied Graphene Materials plc has seen its earnings per share (EPS) grow by 23% per year. Its revenue is up 66% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Applied Graphene Materials plc Been A Good Investment?

With a three year total loss of 15% for the shareholders, Applied Graphene Materials plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Applied Graphene Materials 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. However, we must not forget that the EPS growth has been very strong, but shareholder returns — over the same period — have been disappointing. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which makes us a bit uncomfortable) in Applied Graphene Materials we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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