What Can We Conclude About Avacta Group's (LON:AVCT) CEO Pay?
This article will reflect on the compensation paid to Alastair Smith who has served as CEO of Avacta Group Plc (LON:AVCT) since 2005. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Avacta Group
Comparing Avacta Group Plc's CEO Compensation With the industry
According to our data, Avacta Group Plc has a market capitalization of UKÂŁ408m, and paid its CEO total annual compensation worth UKÂŁ328k over the year to December 2019. Notably, that's an increase of 58% over the year before. We note that the salary portion, which stands at UKÂŁ282.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations ranging from UKÂŁ150m to UKÂŁ602m, the reported median CEO total compensation was UKÂŁ327k. So it looks like Avacta Group compensates Alastair Smith in line with the median for the industry.
Component | 2019 | 2018 | Proportion (2019) |
Salary | UKÂŁ282k | UKÂŁ193k | 86% |
Other | UKÂŁ46k | UKÂŁ15k | 14% |
Total Compensation | UKÂŁ328k | UKÂŁ208k | 100% |
On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. According to our research, Avacta Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Avacta Group Plc's Growth Numbers
Avacta Group Plc saw earnings per share stay pretty flat over the last three years. Its revenue is up 65% over the last year.
The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Avacta Group Plc Been A Good Investment?
Most shareholders would probably be pleased with Avacta Group Plc for providing a total return of 126% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
As we noted earlier, Avacta Group pays its CEO in line with similar-sized companies belonging to the same industry. Shareholder returns for the company have been strong for the last three years. At the same time, revenues are also moving northwards at a healthy pace. On a worrying note, its important to acknowledge that EPS growth has been negative recently. Considering overall performance, it's fair to say Alastair is paid reasonably.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for Avacta Group you should be aware of, and 2 of them are potentially serious.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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