Shareholders Will Probably Hold Off On Increasing Victrex plc's (LON:VCT) CEO Compensation For The Time Being

As many shareholders of Victrex plc (LON:VCT) will be aware, they have not made a gain on their investment in the past three years. Per share earnings growth is also poor, despite revenues growing. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 11 February 2022, where they can impact on future company performance by voting on resolutions, including executive compensation. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

Check out our latest analysis for Victrex

Comparing Victrex plc's CEO Compensation With the industry

Our data indicates that Victrex plc has a market capitalization of UK£1.8b, and total annual CEO compensation was reported as UK£1.5m for the year to September 2021. That's a notable increase of 72% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£558k.

On examining similar-sized companies in the industry with market capitalizations between UK£1.5b and UK£4.7b, we discovered that the median CEO total compensation of that group was UK£1.7m. From this we gather that Jakob Sigurdsson is paid around the median for CEOs in the industry. Moreover, Jakob Sigurdsson also holds UK£327k worth of Victrex stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	UK£558k	UK£558k	37%
Other	UK£969k	UK£331k	63%
Total Compensation	UK£1.5m	UK£889k	100%

On an industry level, roughly 68% of total compensation represents salary and 32% is other remuneration. Victrex pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Victrex plc's Growth

Victrex plc has reduced its earnings per share by 14% a year over the last three years. It achieved revenue growth of 15% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Victrex plc Been A Good Investment?

Given the total shareholder loss of 4.6% over three years, many shareholders in Victrex plc are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Victrex that investors should think about before committing capital to this 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.