How Should Investors React To Image Scan Holdings' (LON:IGE) CEO Pay?

This article will reflect on the compensation paid to Bill Mawer who has served as CEO of Image Scan Holdings Plc (LON:IGE) since 2014. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Image Scan Holdings.

Check out our latest analysis for Image Scan Holdings

Comparing Image Scan Holdings Plc's CEO Compensation With the industry

At the time of writing, our data shows that Image Scan Holdings Plc has a market capitalization of UK£4.2m, and reported total annual CEO compensation of UK£88k for the year to September 2020. We note that's a decrease of 23% compared to last year. In particular, the salary of UK£81.7k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below UK£146m, reported a median total CEO compensation of UK£240k. That is to say, Bill Mawer is paid under the industry median. Moreover, Bill Mawer also holds UK£156k worth of Image Scan Holdings stock directly under their own name.

On an industry level, around 78% of total compensation represents salary and 22% is other remuneration. It's interesting to note that Image Scan Holdings pays out a greater portion of remuneration through salary, compared to the industry. 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 Image Scan Holdings Plc's Growth Numbers

Image Scan Holdings Plc has reduced its earnings per share by 39% a year over the last three years. It achieved revenue growth of 47% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Image Scan Holdings Plc Been A Good Investment?

With a three year total loss of 56% for the shareholders, Image Scan Holdings Plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Image Scan Holdings Plc is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But poor shareholder returns EPS growth have hampered the company over the past three years. Conversely, revenues are increasing at a healthy pace, recently. Although it's fair to say CEO compensation is modest, shareholders might want to see healthier investor returns before thinking Bill deserves a 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 3 warning signs (and 1 which is concerning) in Image Scan Holdings we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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