We Discuss Why Vertu Motors plc's (LON:VTU) CEO Compensation May Be Closely Reviewed

Shareholders will probably not be too impressed with the underwhelming results at Vertu Motors plc (LON:VTU) recently. At the upcoming AGM on 23 June 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Vertu Motors

Comparing Vertu Motors plc's CEO Compensation With the industry

At the time of writing, our data shows that Vertu Motors plc has a market capitalization of UK£168m, and reported total annual CEO compensation of UK£596k for the year to February 2021. Notably, that's a decrease of 14% over the year before. In particular, the salary of UK£337.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from UK£71m to UK£284m, we found that the median CEO total compensation was UK£410k. Hence, we can conclude that Robert Forrester is remunerated higher than the industry median. What's more, Robert Forrester holds UK£3.5m 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£337k	UK£315k	57%
Other	UK£259k	UK£375k	43%
Total Compensation	UK£596k	UK£690k	100%

Talking in terms of the industry, salary represented approximately 73% of total compensation out of all the companies we analyzed, while other remuneration made up 27% of the pie. Vertu Motors sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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.

A Look at Vertu Motors plc's Growth Numbers

Over the last three years, Vertu Motors plc has shrunk its earnings per share by 11% per year. Its revenue is down 17% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Vertu Motors plc Been A Good Investment?

With a three year total loss of 2.1% for the shareholders, Vertu Motors plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

Shareholders may want to check for free if Vertu Motors insiders are buying or selling shares.

Switching gears from Vertu Motors, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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