Shareholders Will Probably Be Cautious Of Increasing Abcam plc's (LON:ABC) CEO Compensation At The Moment

The anaemic share price growth at Abcam plc (LON:ABC) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 01 July 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 Abcam

Comparing Abcam plc's CEO Compensation With the industry

According to our data, Abcam plc has a market capitalization of UK£3.1b, and paid its CEO total annual compensation worth UK£1.6m over the year to June 2020. Notably, that's a decrease of 12% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£615k.

On comparing similar companies from the same industry with market caps ranging from UK£1.4b to UK£4.6b, we found that the median CEO total compensation was UK£2.1m. So it looks like Abcam compensates Alan Hirzel in line with the median for the industry. What's more, Alan Hirzel holds UK£2.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 65% of total compensation out of all the companies we analyzed, while other remuneration made up 35% of the pie. It's interesting to note that Abcam allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Abcam plc's Growth Numbers

Abcam plc has reduced its earnings per share by 51% a year over the last three years. Its revenue is down 1.5% over the previous year.

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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Abcam plc Been A Good Investment?

Abcam plc has generated a total shareholder return of 2.5% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

In Summary...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Abcam that investors should think about before committing capital to this stock.

Switching gears from Abcam, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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