This article will reflect on the compensation paid to Jim Gibson who has served as CEO of Big Yellow Group Plc (LON:BYG) since 1998. This analysis will also assess whether Big Yellow Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Note: The company does not report funds from operations, and as a result, we have used earnings per share in our analysis.
How Does Total Compensation For Jim Gibson Compare With Other Companies In The Industry?
At the time of writing, our data shows that Big Yellow Group Plc has a market capitalization of UK£1.9b, and reported total annual CEO compensation of UK£1.1m for the year to March 2020. We note that's a small decrease of 3.9% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£400k.
For comparison, other companies in the same industry with market capitalizations ranging between UK£1.5b and UK£4.7b had a median total CEO compensation of UK£1.1m. So it looks like Big Yellow Group compensates Jim Gibson in line with the median for the industry. Furthermore, Jim Gibson directly owns UK£28m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 36% of total compensation out of all the companies we analyzed, while other remuneration made up 64% of the pie. Big Yellow Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Big Yellow Group Plc's Growth Numbers
Over the last three years, Big Yellow Group Plc has shrunk its earnings per share by 24% per year. In the last year, its revenue is up 2.4%.
The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Big Yellow Group Plc Been A Good Investment?
Most shareholders would probably be pleased with Big Yellow Group Plc for providing a total return of 46% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we touched on above, Big Yellow Group Plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Some investors may take issue with this, especially considering shrinking EPS for the past three years. But on the bright side, shareholder returns have moved northward during the same period. We do not think CEO compensation is a problem, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Big Yellow Group you should be aware of, and 1 of them doesn't sit too well with us.
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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