What Can We Conclude About Macfarlane Group's (LON:MACF) CEO Pay?

Peter Atkinson became the CEO of Macfarlane Group PLC (LON:MACF) in 2003, 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 assess whether Macfarlane Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Macfarlane Group

Comparing Macfarlane Group PLC's CEO Compensation With the industry

At the time of writing, our data shows that Macfarlane Group PLC has a market capitalization of UK£149m, and reported total annual CEO compensation of UK£530k for the year to December 2019. We note that's an increase of 20% above last year. In particular, the salary of UK£355.0k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between UK£75m and UK£301m, we discovered that the median CEO total compensation of that group was UK£184k. This suggests that Peter Atkinson is paid more than the median for the industry. What's more, Peter Atkinson holds UK£807k worth of shares in the company in their own name.

Speaking on an industry level, nearly 62% of total compensation represents salary, while the remainder of 38% is other remuneration. There isn't a significant difference between Macfarlane Group and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Macfarlane Group PLC's Growth Numbers

Macfarlane Group PLC's earnings per share (EPS) grew 7.9% per year over the last three years. Revenue was pretty flat on last year.

We'd prefer higher revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. 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 Macfarlane Group PLC Been A Good Investment?

Macfarlane Group PLC has generated a total shareholder return of 29% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we noted earlier, Macfarlane Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, EPS growth is not moving in the right direction, and the returns to shareholders could have been better, over the last three years. We'd stop short of saying CEO pay is inappropriate, but we'd like to see healthier business growth from the company, moving forward.

So you may want to check if insiders are buying Macfarlane Group shares with their own money (free access).

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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