Increases to Jersey Electricity plc's (LON:JEL) CEO Compensation Might Cool off for now

Key Insights

• Jersey Electricity's Annual General Meeting to take place on 8th of March
• Salary of UK£263.9k is part of CEO Chris Ambler's total remuneration
• The total compensation is 46% higher than the average for the industry
• Jersey Electricity's total shareholder return over the past three years was 22% while its EPS was down 11% over the past three years

Despite Jersey Electricity plc's (LON:JEL) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 8th of March. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Jersey Electricity

Comparing Jersey Electricity plc's CEO Compensation With The Industry

According to our data, Jersey Electricity plc has a market capitalization of UK£151m, and paid its CEO total annual compensation worth UK£425k over the year to September 2022. That's a fairly small increase of 3.1% over the previous year. In particular, the salary of UK£263.9k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the the United Kingdom Electric Utilities industry with market capitalizations between UK£83m and UK£332m, we discovered that the median CEO total compensation of that group was UK£291k. Accordingly, our analysis reveals that Jersey Electricity plc pays Chris Ambler north of the industry median.

Component	2022	2021	Proportion (2022)
Salary	UK£264k	UK£256k	62%
Other	UK£161k	UK£156k	38%
Total Compensation	UK£425k	UK£412k	100%

Talking in terms of the industry, salary represented approximately 55% of total compensation out of all the companies we analyzed, while other remuneration made up 45% of the pie. Jersey Electricity is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Jersey Electricity plc's Growth Numbers

Over the last three years, Jersey Electricity plc has shrunk its earnings per share by 11% per year. In the last year, its revenue is down 1.0%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Jersey Electricity plc Been A Good Investment?

Jersey Electricity plc has served shareholders reasonably well, with a total return of 22% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Jersey Electricity that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.