Shareholders May Be Wary Of Increasing Versarien plc's (LON:VRS) CEO Compensation Package

Versarien plc (LON:VRS) has not performed well recently and CEO Neill Ricketts will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 23 September 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Versarien

How Does Total Compensation For Neill Ricketts Compare With Other Companies In The Industry?

At the time of writing, our data shows that Versarien plc has a market capitalization of UK£61m, and reported total annual CEO compensation of UK£327k for the year to March 2021. That's a notable increase of 51% on last year. Notably, the salary which is UK£198.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below UK£145m, reported a median total CEO compensation of UK£225k. Accordingly, our analysis reveals that Versarien plc pays Neill Ricketts north of the industry median. Furthermore, Neill Ricketts directly owns UK£4.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	UK£198k	UK£190k	61%
Other	UK£129k	UK£26k	39%
Total Compensation	UK£327k	UK£216k	100%

Talking in terms of the industry, salary represented approximately 65% of total compensation out of all the companies we analyzed, while other remuneration made up 35% of the pie. Versarien is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Versarien plc's Growth Numbers

Over the last three years, Versarien plc has shrunk its earnings per share by 53% per year. It saw its revenue drop 21% 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Versarien plc Been A Good Investment?

With a total shareholder return of -81% over three years, Versarien plc shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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 3 warning signs (and 1 which doesn't sit too well with us) in Versarien we think you should know about.

Switching gears from Versarien, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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