What Does Versarien's (LON:VRS) CEO Pay Reveal?

The CEO of Versarien plc (LON:VRS) is Neill Ricketts, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Versarien pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See 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£64m, and reported total annual CEO compensation of UK£216k for the year to March 2020. That's a modest increase of 3.8% on the prior year. In particular, the salary of UK£190.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under UK£150m, the reported median total CEO compensation was UK£217k. This suggests that Versarien remunerates its CEO largely in line with the industry average. Furthermore, Neill Ricketts directly owns UK£6.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. Versarien pays out 88% of remuneration in the form of a salary, significantly higher than the industry average. 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.

Versarien plc's Growth

Versarien plc has reduced its earnings per share by 27% a year over the last three years. It saw its revenue drop 9.4% over the last year.

The decline in EPS is a bit concerning. 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. 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 Versarien plc Been A Good Investment?

Since shareholders would have lost about 37% over three years, some Versarien plc investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Versarien pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

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. That's why we did our research, and identified 4 warning signs for Versarien (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.

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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