Yahoo Finance Is Colefax Group PLC (LON:CFX) Overpaying Its CEO?
In 1986 David Green was appointed CEO of Colefax Group PLC (LON:CFX). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Colefax Group
How Does David Green's Compensation Compare With Similar Sized Companies?
Our data indicates that Colefax Group PLC is worth UK£29m, and total annual CEO compensation was reported as UK£677k for the year to April 2019. It is worth noting that the CEO compensation consists almost entirely of the salary, worth UK£670k. We looked at a group of companies with market capitalizations under UK£160m, and the median CEO total compensation was UK£265k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Colefax Group stands. Talking in terms of the sector, salary represented approximately 45% of total compensation out of all the companies we analysed, while other remuneration made up 55% of the pie. Colefax Group has gone down a largely traditional route, paying David Green a high salary, giving it preference as a compensation method to non-salary benefits.
Thus we can conclude that David Green receives more in total compensation than the median of a group of companies in the same market, and of similar size to Colefax Group PLC. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Colefax Group has changed over time.
Is Colefax Group PLC Growing?
Colefax Group PLC has seen earnings per share (EPS) move positively by an average of 24% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 6.0%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Colefax Group PLC Been A Good Investment?
Since shareholders would have lost about 29% over three years, some Colefax Group PLC shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared the total CEO remuneration paid by Colefax Group PLC, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Looking into other areas, we've picked out 2 warning signs for Colefax Group that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than Colefax Group, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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