We Take A Look At Whether Gear4music (Holdings) plc's (LON:G4M) CEO May Be Underpaid

The impressive results at Gear4music (Holdings) plc (LON:G4M) recently will be great news for shareholders. This would be kept in mind at the upcoming AGM on 09 September 2021 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for Gear4music (Holdings)

How Does Total Compensation For Andrew Wass Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gear4music (Holdings) plc has a market capitalization of UK£208m, and reported total annual CEO compensation of UK£228k for the year to March 2021. That's a notable increase of 92% on last year. Notably, the salary which is UK£219.0k, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between UK£72m and UK£289m had a median total CEO compensation of UK£534k. In other words, Gear4music (Holdings) pays its CEO lower than the industry median. What's more, Andrew Wass holds UK£63m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	UK£219k	UK£114k	96%
Other	UK£9.0k	UK£5.0k	4%
Total Compensation	UK£228k	UK£119k	100%

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. Gear4music (Holdings) pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Gear4music (Holdings) plc's Growth

Over the past three years, Gear4music (Holdings) plc has seen its earnings per share (EPS) grow by 108% per year. It achieved revenue growth of 31% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Gear4music (Holdings) plc Been A Good Investment?

Most shareholders would probably be pleased with Gear4music (Holdings) plc for providing a total return of 60% 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.

In Summary...

Andrew receives almost all of their compensation through a salary. The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

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 1 warning sign for Gear4music (Holdings) that you should be aware of before investing.

Important note: Gear4music (Holdings) 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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