Shareholders Would Not Be Objecting To Gamma Communications plc's (LON:GAMA) CEO Compensation And Here's Why

It would be hard to discount the role that CEO Andrew Taylor has played in delivering the impressive results at Gamma Communications plc (LON:GAMA) recently. Coming up to the next AGM on 20 May 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for Gamma Communications

Comparing Gamma Communications plc's CEO Compensation With the industry

Our data indicates that Gamma Communications plc has a market capitalization of UK£1.7b, and total annual CEO compensation was reported as UK£912k for the year to December 2020. That's just a smallish increase of 3.2% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£412k.

On comparing similar companies from the same industry with market caps ranging from UK£1.4b to UK£4.6b, we found that the median CEO total compensation was UK£841k. So it looks like Gamma Communications compensates Andrew Taylor in line with the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	UK£412k	UK£402k	45%
Other	UK£500k	UK£482k	55%
Total Compensation	UK£912k	UK£884k	100%

On an industry level, around 46% of total compensation represents salary and 54% is other remuneration. Gamma Communications is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Gamma Communications plc's Growth Numbers

Gamma Communications plc's earnings per share (EPS) grew 40% per year over the last three years. Its revenue is up 20% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing 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 Gamma Communications plc Been A Good Investment?

We think that the total shareholder return of 157%, over three years, would leave most Gamma Communications plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Gamma Communications that investors should think about before committing capital to this stock.

Switching gears from Gamma Communications, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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