This article will reflect on the compensation paid to Richard Tyson who has served as CEO of TT Electronics plc (LON:TTG) since 2014. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Richard Tyson Compare With Other Companies In The Industry?
Our data indicates that TT Electronics plc has a market capitalization of UK£360m, and total annual CEO compensation was reported as UK£1.5m for the year to December 2019. Notably, that's a decrease of 31% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£478k.
For comparison, other companies in the same industry with market capitalizations ranging between UK£151m and UK£605m had a median total CEO compensation of UK£709k. Hence, we can conclude that Richard Tyson is remunerated higher than the industry median. Furthermore, Richard Tyson directly owns UK£1.8m worth of shares in the company.
On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. In TT Electronics' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at TT Electronics plc's Growth Numbers
TT Electronics plc has reduced its earnings per share by 35% a year over the last three years. In the last year, its revenue is down 5.0%.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 TT Electronics plc Been A Good Investment?
With a three year total loss of 1.0% for the shareholders, TT Electronics plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, TT Electronics 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. Disappointingly, share price gains over the last three years have failed to materialize. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for TT Electronics you should be aware of, and 1 of them is a bit concerning.
Important note: TT Electronics is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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TT Electronics plc provides engineered electronics for performance critical applications in the automation and electrification, healthcare, and aerospace and defense markets worldwide.
Adequate balance sheet with acceptable track record.