Yahoo Finance Some Shareholders May find It Hard To Increase Abcam plc's (LON:ABC) CEO Compensation This Year
The share price of Abcam plc (LON:ABC) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. Some of these issues will occupy shareholders' minds as the AGM rolls around on 01 July 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
View our latest analysis for Abcam
How Does Total Compensation For Alan Hirzel Compare With Other Companies In The Industry?
At the time of writing, our data shows that Abcam plc has a market capitalization of UK£3.1b, and reported total annual CEO compensation of UK£1.6m for the year to June 2020. We note that's a decrease of 12% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£615k.
On examining similar-sized companies in the industry with market capitalizations between UK£1.4b and UK£4.6b, we discovered that the median CEO total compensation of that group was UK£2.1m. From this we gather that Alan Hirzel is paid around the median for CEOs in the industry. Moreover, Alan Hirzel also holds UK£2.9m worth of Abcam stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | UK£615k | UK£600k | 39% |
Other | UK£981k | UK£1.2m | 61% |
Total Compensation | UK£1.6m | UK£1.8m | 100% |
On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. It's interesting to note that Abcam allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Abcam plc's Growth
Over the last three years, Abcam plc has shrunk its earnings per share by 51% per year. In the last year, its revenue is down 1.5%.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Abcam plc Been A Good Investment?
Abcam plc has generated a total shareholder return of 2.5% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.
To Conclude...
The flat share price growth combined with the the fact that earnings have failed to grow makes us wonder whether the share price will have any further strong momentum. 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 it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Abcam 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.
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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