Richard Smith has been the CEO of The Unite Group plc (LON:UTG) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Unite Group.
Note: The company does not report funds from operations, and as a result, we have used earnings per share in our analysis.
Check out our latest analysis for Unite Group
Comparing The Unite Group plc's CEO Compensation With the industry
Our data indicates that The Unite Group plc has a market capitalization of UK£4.1b, and total annual CEO compensation was reported as UK£2.7m for the year to December 2019. That's a notable increase of 28% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£457k.
On comparing similar companies from the same industry with market caps ranging from UK£3.0b to UK£9.0b, we found that the median CEO total compensation was UK£2.2m. So it looks like Unite Group compensates Richard Smith in line with the median for the industry. What's more, Richard Smith holds UK£2.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | UK£457k | UK£446k | 17% |
| Other | UK£2.3m | UK£1.7m | 83% |
| Total Compensation | UK£2.7m | UK£2.1m | 100% |
On an industry level, around 36% of total compensation represents salary and 64% is other remuneration. In Unite Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at The Unite Group plc's Growth Numbers
The Unite Group plc has reduced its earnings per share by 70% a year over the last three years. It achieved revenue growth of 40% over the last year.
The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 The Unite Group plc Been A Good Investment?
Boasting a total shareholder return of 41% over three years, The Unite Group plc has done well by shareholders. 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.
In Summary...
As we noted earlier, Unite Group pays its CEO in line with similar-sized companies belonging to the same industry. Shareholder returns for the company have been strong for the last three years. At the same time, revenues are also moving northwards at a healthy pace. However, on a concerning note, EPS is not growing. Overall, the company's performance hasn't been that disappointing for us to object the CEO compensation.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Unite Group (of which 1 shouldn't be ignored!) 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 LSE:UTG
Unite Group
Owns, manages, and develops purpose-built student accommodation facilities for the higher education sector in the United Kingdom.
Good value with proven track record.
