Next Fifteen Communications Group plc's (LON:NFC) CEO Compensation Is Looking A Bit Stretched At The Moment

Next Fifteen Communications Group plc (LON:NFC) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 24 June 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Next Fifteen Communications Group

Comparing Next Fifteen Communications Group plc's CEO Compensation With the industry

At the time of writing, our data shows that Next Fifteen Communications Group plc has a market capitalization of UK£816m, and reported total annual CEO compensation of UK£1.2m for the year to January 2021. That's a notable increase of 23% on last year. In particular, the salary of UK£634.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from UK£287m to UK£1.1b, we found that the median CEO total compensation was UK£630k. Accordingly, our analysis reveals that Next Fifteen Communications Group plc pays Tim Dyson north of the industry median. Furthermore, Tim Dyson directly owns UK£45m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	UK£634k	UK£713k	54%
Other	UK£548k	UK£246k	46%
Total Compensation	UK£1.2m	UK£959k	100%

Speaking on an industry level, nearly 59% of total compensation represents salary, while the remainder of 41% is other remuneration. Our data reveals that Next Fifteen Communications Group allocates salary more or less in line with the wider market. 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.

Next Fifteen Communications Group plc's Growth

Over the last three years, Next Fifteen Communications Group plc has shrunk its earnings per share by 86% per year. It achieved revenue growth of 7.6% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Next Fifteen Communications Group plc Been A Good Investment?

We think that the total shareholder return of 77%, over three years, would leave most Next Fifteen Communications Group 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.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Next Fifteen Communications Group that investors should look into moving forward.

Important note: Next Fifteen Communications Group 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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