We Think Gama Aviation Plc's (LON:GMAA) CEO Compensation Package Needs To Be Put Under A Microscope

Shareholders will probably not be too impressed with the underwhelming results at Gama Aviation Plc (LON:GMAA) recently. At the upcoming AGM on 29 June 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Gama Aviation

Comparing Gama Aviation Plc's CEO Compensation With the industry

At the time of writing, our data shows that Gama Aviation Plc has a market capitalization of UK£24m, and reported total annual CEO compensation of US$799k for the year to December 2020. That's a notable increase of 31% on last year. Notably, the salary which is US$494.2k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below UK£144m, reported a median total CEO compensation of US$597k. Accordingly, our analysis reveals that Gama Aviation Plc pays Marwan Abdel-Khalek north of the industry median. Furthermore, Marwan Abdel-Khalek directly owns UK£5.2m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 53% of total compensation represents salary and 47% is other remuneration. It's interesting to note that Gama Aviation 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.

Gama Aviation Plc's Growth

Gama Aviation Plc has reduced its earnings per share by 111% a year over the last three years. In the last year, its revenue is down 26%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Gama Aviation Plc Been A Good Investment?

The return of -81% over three years would not have pleased Gama Aviation Plc shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Gama Aviation you should be aware of, and 1 of them is potentially serious.

Switching gears from Gama Aviation, 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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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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