Here's Why United Utilities Group PLC's (LON:UU.) CEO Compensation Is The Least Of Shareholders' Concerns

Performance at United Utilities Group PLC (LON:UU.) has been reasonably good and CEO Steve Mogford has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 23 July 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

Check out our latest analysis for United Utilities Group

Comparing United Utilities Group PLC's CEO Compensation With the industry

According to our data, United Utilities Group PLC has a market capitalization of UK£7.1b, and paid its CEO total annual compensation worth UK£2.9m over the year to March 2021. We note that's an increase of 11% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£736k.

On comparing similar companies in the industry with market capitalizations above UK£5.8b, we found that the median total CEO compensation was UK£2.9m. So it looks like United Utilities Group compensates Steve Mogford in line with the median for the industry. Furthermore, Steve Mogford directly owns UK£2.1m worth of shares in the company.

Component	2021	2020	Proportion (2021)
Salary	UK£736k	UK£769k	25%
Other	UK£2.2m	UK£1.9m	75%
Total Compensation	UK£2.9m	UK£2.7m	100%

On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. United Utilities Group pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

United Utilities Group PLC's Growth

Over the past three years, United Utilities Group PLC has seen its earnings per share (EPS) grow by 8.5% per year. Its revenue is down 2.8% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 United Utilities Group PLC Been A Good Investment?

We think that the total shareholder return of 66%, over three years, would leave most United Utilities Group PLC shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 2 which shouldn't be ignored) in United Utilities Group we think you should know about.

Important note: United Utilities Group 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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