What Does Treatt's (LON:TET) CEO Pay Reveal?

Daemmon Reeve has been the CEO of Treatt plc (LON:TET) since 2012, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Treatt.

Check out our latest analysis for Treatt

Comparing Treatt plc's CEO Compensation With the industry

According to our data, Treatt plc has a market capitalization of UK£490m, and paid its CEO total annual compensation worth UK£1.2m over the year to September 2020. Notably, that's a decrease of 19% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£337k.

In comparison with other companies in the industry with market capitalizations ranging from UK£294m to UK£1.2b, the reported median CEO total compensation was UK£960k. This suggests that Treatt remunerates its CEO largely in line with the industry average. Moreover, Daemmon Reeve also holds UK£4.0m worth of Treatt stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

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. Treatt pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Treatt plc's Growth

Over the past three years, Treatt plc has seen its earnings per share (EPS) grow by 3.4% per year. It saw its revenue drop 3.3% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Treatt plc Been A Good Investment?

Boasting a total shareholder return of 90% over three years, Treatt plc has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As we touched on above, Treatt plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has been found wanting in terms of EPS growth over the past three years. Meanwhile, shareholder returns have remained positive over the same time frame. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before a bump in pay.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Treatt (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.

Important note: Treatt is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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