How Should Investors React To Oxford Instruments' (LON:OXIG) CEO Pay?

Ian Barkshire became the CEO of Oxford Instruments plc (LON:OXIG) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Oxford Instruments pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Oxford Instruments

How Does Total Compensation For Ian Barkshire Compare With Other Companies In The Industry?

Our data indicates that Oxford Instruments plc has a market capitalization of UK£1.1b, and total annual CEO compensation was reported as UK£1.8m for the year to March 2020. That's a slightly lower by 6.1% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£440k.

On examining similar-sized companies in the industry with market capitalizations between UK£741m and UK£2.4b, we discovered that the median CEO total compensation of that group was UK£820k. This suggests that Ian Barkshire is paid more than the median for the industry. What's more, Ian Barkshire holds UK£241k worth of shares in the company in their own name.

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. In Oxford Instruments' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Oxford Instruments plc's Growth

Oxford Instruments plc has seen its earnings per share (EPS) increase by 52% a year over the past three years. In the last year, its revenue is down 7.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Oxford Instruments plc Been A Good Investment?

Boasting a total shareholder return of 135% over three years, Oxford Instruments plc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we touched on above, Oxford Instruments plc is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, Oxford Instruments has produced strong EPS growth and shareholder returns over the last three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. And given most shareholders are probably very happy with recent returns, they might even think that Ian deserves a raise!

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Oxford Instruments that investors should think about before committing capital to this 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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