Yahoo Finance Our Take On CareTech Holdings' (LON:CTH) CEO Salary
This article will reflect on the compensation paid to Haroon Sheikh who has served as CEO of CareTech Holdings PLC (LON:CTH) since 1993. This analysis will also assess whether CareTech Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for CareTech Holdings
Comparing CareTech Holdings PLC's CEO Compensation With the industry
According to our data, CareTech Holdings PLC has a market capitalization of UK£593m, and paid its CEO total annual compensation worth UK£971k over the year to September 2020. That's a modest increase of 5.5% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£450k.
On comparing similar companies from the same industry with market caps ranging from UK£291m to UK£1.2b, we found that the median CEO total compensation was UK£440k. This suggests that Haroon Sheikh is paid more than the median for the industry. What's more, Haroon Sheikh holds UK£3.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2019 | Proportion (2020) |
Salary | UK£450k | UK£400k | 46% |
Other | UK£521k | UK£520k | 54% |
Total Compensation | UK£971k | UK£920k | 100% |
On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. In CareTech Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at CareTech Holdings PLC's Growth Numbers
CareTech Holdings PLC has reduced its earnings per share by 3.5% a year over the last three years. In the last year, its revenue is up 8.8%.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. 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 CareTech Holdings PLC Been A Good Investment?
Boasting a total shareholder return of 43% over three years, CareTech Holdings PLC has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
To Conclude...
As we touched on above, CareTech Holdings PLC is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for CareTech Holdings that investors should be aware of in a dynamic business environment.
Important note: CareTech Holdings 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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