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Kris Hagerman became the CEO of Sophos Group plc (LON:SOPH) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. 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.
How Does Kris Hagerman’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Sophos Group plc has a market cap of UK£1.7b, and is paying total annual CEO compensation of US$8.7m. (This is based on the year to March 2018). While we always look at total compensation first, we note that the salary component is less, at US$716k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$1.6m.
Thus we can conclude that Kris Hagerman receives more in total compensation than the median of a group of companies in the same market, and of similar size to Sophos Group plc. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Sophos Group has changed over time.
Is Sophos Group plc Growing?
Over the last three years Sophos Group plc has grown its earnings per share (EPS) by an average of 29% per year (using a line of best fit). Its revenue is up 22% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Sophos Group plc Been A Good Investment?
I think that the total shareholder return of 71%, over three years, would leave most Sophos Group plc shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Sophos Group plc pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Sophos Group.
Important note: Sophos Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.