Adam Vicary has been the CEO of Castings P.L.C. (LON:CGS) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. 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 Castings
Comparing Castings P.L.C.'s CEO Compensation With the industry
Our data indicates that Castings P.L.C. has a market capitalization of UK£166m, and total annual CEO compensation was reported as UK£345k for the year to March 2020. That's a slightly lower by 3.4% over the previous year. We note that the salary portion, which stands at UK£290.0k constitutes the majority of total compensation received by the CEO.
On comparing similar companies from the same industry with market caps ranging from UK£74m to UK£294m, we found that the median CEO total compensation was UK£490k. This suggests that Castings remunerates its CEO largely in line with the industry average. Furthermore, Adam Vicary directly owns UK£114k worth of shares in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | UK£290k | UK£277k | 84% |
| Other | UK£55k | UK£80k | 16% |
| Total Compensation | UK£345k | UK£357k | 100% |
Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Castings pays out 84% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Castings P.L.C.'s Growth
Castings P.L.C. has reduced its earnings per share by 33% a year over the last three years. Its revenue is down 31% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Castings P.L.C. Been A Good Investment?
Since shareholders would have lost about 2.1% over three years, some Castings P.L.C. 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, Castings pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative 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 3 warning signs for Castings (of which 1 shouldn't be ignored!) 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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About LSE:CGS
Castings
Engages in the iron casting and machining activities in the United Kingdom, Germany, Sweden, the Netherlands, rest of Europe, North and South America, and internationally.
Flawless balance sheet, undervalued and pays a dividend.
