Why Gear4music (Holdings)'s (LON:G4M) CEO Pay Matters

Andrew Wass is the CEO of Gear4music (Holdings) plc (LON:G4M), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Gear4music (Holdings)

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

Our data indicates that Gear4music (Holdings) plc has a market capitalization of UK£166m, and total annual CEO compensation was reported as UK£119k for the year to March 2020. That's a notable decrease of 50% on last year. In particular, the salary of UK£114.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between UK£73m and UK£291m had a median total CEO compensation of UK£409k. This suggests that Andrew Wass is paid below the industry median. Moreover, Andrew Wass also holds UK£50m worth of Gear4music (Holdings) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Investors will find it interesting that Gear4music (Holdings) pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Gear4music (Holdings) plc's Growth

Over the past three years, Gear4music (Holdings) plc has seen its earnings per share (EPS) grow by 68% per year. It achieved revenue growth of 23% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Gear4music (Holdings) plc Been A Good Investment?

Gear4music (Holdings) plc has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Andrew receives almost all of their compensation through a salary. As we touched on above, Gear4music (Holdings) plc is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But over the last three years, EPS growth has been growing rapidly, which is a great sign for the company. Shareholder returns, in comparison, have not been as impressive. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. So considering these factors, we think Andrew is modestly compensated.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Gear4music (Holdings) (1 doesn't sit too well with us!) that you should be aware of before investing here.

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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