The CEO of System1 Group PLC (LON:SYS1) is John Kearon, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether System1 Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for System1 Group
Comparing System1 Group PLC's CEO Compensation With the industry
At the time of writing, our data shows that System1 Group PLC has a market capitalization of UK£24m, and reported total annual CEO compensation of UK£220k for the year to March 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is UK£200.0k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under UK£143m, the reported median total CEO compensation was UK£212k. This suggests that System1 Group remunerates its CEO largely in line with the industry average. Furthermore, John Kearon directly owns UK£5.5m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | UK£200k | UK£200k | 91% |
| Other | UK£20k | UK£21k | 9% |
| Total Compensation | UK£220k | UK£221k | 100% |
On an industry level, around 44% of total compensation represents salary and 56% is other remuneration. System1 Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
System1 Group PLC's Growth
System1 Group PLC has reduced its earnings per share by 78% a year over the last three years. In the last year, its revenue is down 20%.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has System1 Group PLC Been A Good Investment?
Given the total shareholder loss of 40% over three years, many shareholders in System1 Group PLC are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
As previously discussed, John is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
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 4 warning signs for System1 Group (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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About AIM:SYS1
System1 Group
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