Is Nasstar plc’s (LON:NASA) CEO Being Overpaid?

In 2014 Nigel Redwood was appointed CEO of Nasstar plc (LON:NASA). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Nasstar

How Does Nigel Redwood’s Compensation Compare With Similar Sized Companies?

Our data indicates that Nasstar plc is worth UK£68m, and total annual CEO compensation is UK£285k. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at UK£174k. We took a group of companies with market capitalizations below UK£153m, and calculated the median CEO total compensation to be UK£238k.

So Nigel Redwood receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

The graphic below shows how CEO compensation at Nasstar has changed from year to year.

AIM:NASA CEO Compensation, April 17th 2019
AIM:NASA CEO Compensation, April 17th 2019

Is Nasstar plc Growing?

Nasstar plc has reduced its earnings per share by an average of 1.1% a year, over the last three years (measured with a line of best fit). Its revenue is up 12% over last year.

The lack of earnings per share growth in the last three years is unimpressive. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Nasstar plc Been A Good Investment?

Nasstar plc has served shareholders reasonably well, with a total return of 27% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

Nigel Redwood is paid around what is normal the leaders of comparable size companies.

We feel that earnings per share have been a bit disappointing, but and we don’t think the total returns are amazing. We do not think the CEO pay is a problem, but we’d venture the company should look to improve its business metrics (and share price) before paying any more. Whatever your view on compensation, you might want to check if insiders are buying or selling Nasstar shares (free trial).

If you want to buy a stock that is better than Nasstar, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.