Peter Gunning is the CEO of Grafenia Plc (LON:GRA), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Grafenia pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Grafenia Plc's CEO Compensation With the industry
At the time of writing, our data shows that Grafenia Plc has a market capitalization of UK£5.7m, and reported total annual CEO compensation of UK£187k for the year to March 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of UK£170.3k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below UK£153m, we found that the median total CEO compensation was UK£301k. Accordingly, Grafenia pays its CEO under the industry median. What's more, Peter Gunning holds UK£86k worth of shares in the company in their own name.
On an industry level, around 56% of total compensation represents salary and 44% is other remuneration. Grafenia is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Grafenia Plc's Growth Numbers
Grafenia Plc has reduced its earnings per share by 29% a year over the last three years. Its revenue is down 2.2% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Grafenia Plc Been A Good Investment?
With a three year total loss of 52% for the shareholders, Grafenia Plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Grafenia pays its CEO lower than the norm for similar-sized companies belonging to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 3 which don't sit too well with us) in Grafenia we think you should know about.
Important note: Grafenia 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.
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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