We Think Some Shareholders May Hesitate To Increase Bonhill Group Plc's (LON:BONH) CEO Compensation

The underwhelming share price performance of Bonhill Group Plc (LON:BONH) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 27 May 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Bonhill Group

How Does Total Compensation For Simon Stilwell Compare With Other Companies In The Industry?

Our data indicates that Bonhill Group Plc has a market capitalization of UK£14m, and total annual CEO compensation was reported as UK£330k for the year to December 2020. We note that's an increase of 62% above last year. Notably, the salary which is UK£244.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under UK£141m, the reported median total CEO compensation was UK£284k. So it looks like Bonhill Group compensates Simon Stilwell in line with the median for the industry. Moreover, Simon Stilwell also holds UK£408k worth of Bonhill Group stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	UK£244k	UK£204k	74%
Other	UK£86k	-	26%
Total Compensation	UK£330k	UK£204k	100%

On an industry level, roughly 58% of total compensation represents salary and 42% is other remuneration. According to our research, Bonhill Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Bonhill Group Plc's Growth Numbers

Bonhill Group Plc has seen its earnings per share (EPS) increase by 31% a year over the past three years. In the last year, its revenue is down 27%.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Bonhill Group Plc Been A Good Investment?

The return of -90% over three years would not have pleased Bonhill Group Plc shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 Bonhill Group 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. 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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