How Should Investors React To Zytronic's (LON:ZYT) CEO Pay?

Mark Cambridge has been the CEO of Zytronic plc (LON:ZYT) since 2008, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Zytronic

How Does Total Compensation For Mark Cambridge Compare With Other Companies In The Industry?

According to our data, Zytronic plc has a market capitalization of UK£24m, and paid its CEO total annual compensation worth UK£167k over the year to September 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at UK£153.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under UK£142m, the reported median total CEO compensation was UK£214k. From this we gather that Mark Cambridge is paid around the median for CEOs in the industry. What's more, Mark Cambridge holds UK£143k worth of shares in the company in their own name.

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. It's interesting to note that Zytronic 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.

A Look at Zytronic plc's Growth Numbers

Over the last three years, Zytronic plc has shrunk its earnings per share by 49% per year. It saw its revenue drop 37% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Zytronic plc Been A Good Investment?

With a three year total loss of 62% for the shareholders, Zytronic plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Zytronic pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Zytronic (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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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