Steve Rowe has been the CEO of Marks and Spencer Group plc (LON:MKS) since 2016, and this article will examine the executive's compensation 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.
Comparing Marks and Spencer Group plc's CEO Compensation With the industry
At the time of writing, our data shows that Marks and Spencer Group plc has a market capitalization of UK£2.7b, and reported total annual CEO compensation of UK£1.2m for the year to March 2020. That's a notable decrease of 20% on last year. We note that the salary portion, which stands at UK£828.0k constitutes the majority of total compensation received by the CEO.
On comparing similar companies from the same industry with market caps ranging from UK£1.5b to UK£4.8b, we found that the median CEO total compensation was UK£1.5m. So it looks like Marks and Spencer Group compensates Steve Rowe in line with the median for the industry. Furthermore, Steve Rowe directly owns UK£780k worth of shares in the company.
On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. There isn't a significant difference between Marks and Spencer Group and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Marks and Spencer Group plc's Growth Numbers
Marks and Spencer Group plc has reduced its earnings per share by 87% a year over the last three years. In the last year, its revenue is down 8.4%.
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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Marks and Spencer Group plc Been A Good Investment?
With a three year total loss of 48% for the shareholders, Marks and Spencer Group plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, Marks and Spencer Group plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which is concerning) in Marks and Spencer Group we think you should know about.
Switching gears from Marks and Spencer Group, 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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