Alan Hirzel has been the CEO of Abcam plc (LON:ABC) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Abcam pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Abcam plc's CEO Compensation With the industry
According to our data, Abcam plc has a market capitalization of UK£3.2b, and paid its CEO total annual compensation worth UK£1.6m over the year to June 2020. We note that's a decrease of 17% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£615k.
On comparing similar companies from the same industry with market caps ranging from UK£1.5b to UK£4.9b, we found that the median CEO total compensation was UK£4.5m. Accordingly, Abcam pays its CEO under the industry median. What's more, Alan Hirzel holds UK£2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. 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.
Abcam plc's Growth
Over the last three years, Abcam plc has shrunk its earnings per share by 34% per year. Revenue was pretty flat on last year.
Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Abcam plc Been A Good Investment?
Most shareholders would probably be pleased with Abcam plc for providing a total return of 50% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we noted earlier, Abcam pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And although the company is suffering from declining EPS growth over the past three years, shareholder returns remain strong. Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Abcam that you should be aware of before investing.
Important note: Abcam 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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