How Should Investors Feel About Headlam Group's (LON:HEAD) CEO Remuneration?

This article will reflect on the compensation paid to Steve Wilson who has served as CEO of Headlam Group plc (LON:HEAD) since 2016. This analysis will also assess whether Headlam Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Headlam Group

How Does Total Compensation For Steve Wilson Compare With Other Companies In The Industry?

According to our data, Headlam Group plc has a market capitalization of UK£310m, and paid its CEO total annual compensation worth UK£799k over the year to December 2019. Notably, that's an increase of 36% over the year before. In particular, the salary of UK£484.0k, 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£149m and UK£595m had a median total CEO compensation of UK£388k. Accordingly, our analysis reveals that Headlam Group plc pays Steve Wilson north of the industry median. What's more, Steve Wilson 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.

On an industry level, around 95% of total compensation represents salary and 4.8% is other remuneration. In Headlam Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Headlam Group plc's Growth Numbers

Over the last three years, Headlam Group plc has shrunk its earnings per share by 29% per year. Its revenue is down 15% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Headlam Group plc Been A Good Investment?

With a three year total loss of 28% for the shareholders, Headlam Group plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, Headlam Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Headlam Group that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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