Simon Humphrey has been the CEO of Modern Water plc (LON:MWG) since 2006. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Modern Water
How Does Simon Humphrey's Compensation Compare With Similar Sized Companies?
Our data indicates that Modern Water plc is worth UK£9m, and total annual CEO compensation is UK£156k. We examined a group of similar sized companies, with market capitalizations of below UK£156m. The median CEO compensation in that group is UK£244k.
Most shareholders would consider it a positive that Simon Humphrey takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at Modern Water has changed from year to year.
Is Modern Water plc Growing?
On average over the last three years, Modern Water plc has grown earnings per share (EPS) by 50% each year. Its revenue is down -4.8% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. So this freereport on the analyst consensus forecasts could help you make a master move on this stock.
Has Modern Water plc Been A Good Investment?
With a three year total loss of 3.6%, Modern Water plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Modern Water plc is currently paying its CEO below what is normal for companies of its size. Considering the underlying business is growing earnings, this would suggest the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we don't think, Simon Humphrey is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out.
This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. I usually take a closer look when a company pays its CEO below average. For example you might check if insiders are buying shares.
But note: Modern Water may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.