Shareholders May Be Wary Of Increasing Midwich Group plc's (LON:MIDW) CEO Compensation Package

Midwich Group plc (LON:MIDW) has not performed well recently and CEO Stephen Fenby will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 10 May 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Midwich Group

How Does Total Compensation For Stephen Fenby Compare With Other Companies In The Industry?

Our data indicates that Midwich Group plc has a market capitalization of UK£418m, and total annual CEO compensation was reported as UK£260k for the year to December 2020. We note that's a decrease of 35% compared to last year. We note that the salary portion, which stands at UK£237.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from UK£144m to UK£575m, the reported median CEO total compensation was UK£361k. From this we gather that Stephen Fenby is paid around the median for CEOs in the industry. Furthermore, Stephen Fenby directly owns UK£92m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. It's interesting to note that Midwich Group pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Midwich Group plc's Growth

Over the last three years, Midwich Group plc has shrunk its earnings per share by 41% per year. Its revenue is up 3.7% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Midwich Group plc Been A Good Investment?

Given the total shareholder loss of 21% over three years, many shareholders in Midwich Group plc are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Midwich Group that investors should be aware of in a dynamic business environment.

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.

When trading Midwich Group or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.