Why Aukett Swanke Group's (LON:AUK) CEO Pay Matters

J. Nicholas Thompson became the CEO of Aukett Swanke Group Plc (LON:AUK) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Aukett Swanke Group.

See our latest analysis for Aukett Swanke Group

How Does Total Compensation For J. Nicholas Thompson Compare With Other Companies In The Industry?

According to our data, Aukett Swanke Group Plc has a market capitalization of UK£3.2m, and paid its CEO total annual compensation worth UK£231k over the year to September 2019. That's a modest increase of 4.1% on the prior year. Notably, the salary which is UK£210.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below UK£155m, reported a median total CEO compensation of UK£292k. So it looks like Aukett Swanke Group compensates J. Nicholas Thompson in line with the median for the industry. Furthermore, J. Nicholas Thompson directly owns UK£328k worth of shares in the company.

On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. According to our research, Aukett Swanke Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Aukett Swanke Group Plc's Growth

Over the past three years, Aukett Swanke Group Plc has seen its earnings per share (EPS) grow by 23% per year. It achieved revenue growth of 7.7% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Aukett Swanke Group Plc Been A Good Investment?

Given the total shareholder loss of 26% over three years, many shareholders in Aukett Swanke Group Plc are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, J. Nicholas is compensated close to the median for companies of its size, and which belong to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. But earnings growth is moving in a favorable direction, certainly a positive sign. It's tough for us to say CEO compensation is too generous when earnings growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for Aukett Swanke Group that investors should think about before committing capital to this stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.