We Take A Look At Why Centrica plc's (LON:CNA) CEO Compensation Is Well Earned

Key Insights

• Centrica to hold its Annual General Meeting on 8th of May
• Total pay for CEO Chris O'Shea includes UK£845.0k salary
• The total compensation is similar to the average for the industry
• Centrica's total shareholder return over the past three years was 122% while its EPS grew by 39% over the past three years

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It would be hard to discount the role that CEO Chris O'Shea has played in delivering the impressive results at Centrica plc (LON:CNA) recently. Coming up to the next AGM on 8th of May, shareholders would be keeping this in mind. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

View our latest analysis for Centrica

Comparing Centrica plc's CEO Compensation With The Industry

Our data indicates that Centrica plc has a market capitalization of UK£7.9b, and total annual CEO compensation was reported as UK£4.3m for the year to December 2024. That's a notable decrease of 47% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£845k.

For comparison, other companies in the the United Kingdom Integrated Utilities industry with market capitalizations above UK£6.0b, reported a median total CEO compensation of UK£4.3m. From this we gather that Chris O'Shea is paid around the median for CEOs in the industry. What's more, Chris O'Shea holds UK£8.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. In Centrica's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Centrica plc's Growth Numbers

Over the past three years, Centrica plc has seen its earnings per share (EPS) grow by 39% per year. It saw its revenue drop 25% over the last year.

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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Centrica plc Been A Good Investment?

Boasting a total shareholder return of 122% over three years, Centrica 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.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Centrica you should be aware of, and 2 of them are a bit unpleasant.

Switching gears from Centrica, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.