How Should Investors React To Netcall's (LON:NET) CEO Pay?

Henrik Bang has been the CEO of Netcall plc (LON:NET) since 2004, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Netcall.

Check out our latest analysis for Netcall

How Does Total Compensation For Henrik Bang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Netcall plc has a market capitalization of UK£74m, and reported total annual CEO compensation of UK£510k for the year to June 2020. That's a notable increase of 26% on last year. Notably, the salary which is UK£298.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under UK£148m, the reported median total CEO compensation was UK£252k. Accordingly, our analysis reveals that Netcall plc pays Henrik Bang north of the industry median. What's more, Henrik Bang holds UK£2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. Netcall sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Netcall plc's Growth Numbers

Over the last three years, Netcall plc has shrunk its earnings per share by 32% per year. It achieved revenue growth of 9.6% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Netcall plc Been A Good Investment?

Netcall plc has generated a total shareholder return of 4.9% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we touched on above, Netcall plc is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, EPS has not grown in three years, failing to impress us. And shareholder returns are decent but not great. So we think more research is needed, but we don't think the CEO is underpaid.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which is a bit concerning) in Netcall we think you should know about.

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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