What Does Softcat's (LON:SCT) CEO Pay Reveal?

Graeme Watt became the CEO of Softcat plc (LON:SCT) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Softcat

Comparing Softcat plc's CEO Compensation With the industry

According to our data, Softcat plc has a market capitalization of UK£2.7b, and paid its CEO total annual compensation worth UK£991k over the year to July 2020. That's a fairly small increase of 7.8% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£464k.

For comparison, other companies in the same industry with market capitalizations ranging between UK£1.5b and UK£4.7b had a median total CEO compensation of UK£991k. So it looks like Softcat compensates Graeme Watt in line with the median for the industry.

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Softcat pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Softcat plc's Growth Numbers

Softcat plc's earnings per share (EPS) grew 23% per year over the last three years. Its revenue is up 8.5% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Softcat plc Been A Good Investment?

Boasting a total shareholder return of 183% over three years, Softcat plc has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

As previously discussed, Graeme is compensated close to the median for companies of its size, and which belong to the same industry. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. So one could argue that CEO compensation is quite modest, if you consider company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Softcat (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Softcat, 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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