Is Treatt plc’s (LON:TET) CEO Pay Fair?

In 2012 Daemmon Reeve was appointed CEO of Treatt plc (LON:TET). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

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How Does Daemmon Reeve’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Treatt plc has a market cap of UK£259m, and is paying total annual CEO compensation of UK£1.8m. (This is based on the year to 2018). We note that’s an increase of 191% above last year. While we always look at total compensation first, we note that the salary component is less, at UK£305k. When we examined a selection of companies with market caps ranging from UK£157m to UK£629m, we found the median CEO compensation was UK£688k.

Thus we can conclude that Daemmon Reeve receives more in total compensation than the median of a group of companies in the same market, and of similar size to Treatt plc. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. So this free report on the analyst consensus forecasts could help you make a master move on this stock.

You can see, below, how CEO compensation at Treatt has changed over time.

LSE:TET CEO Compensation January 13th 19
LSE:TET CEO Compensation January 13th 19

Is Treatt plc Growing?

Over the last three years Treatt plc has grown its earnings per share (EPS) by an average of 19% per year (using a line of best fit). It achieved revenue growth of 11% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.

Has Treatt plc Been A Good Investment?

I think that the total shareholder return of 147%, over three years, would leave most Treatt plc shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared total CEO remuneration at Treatt plc with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Treatt insiders are buying or selling shares.

Important note: Treatt may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.