Yahoo Finance Is Centrica plc's (LON:CNA) CEO Pay Justified?
Iain Conn became the CEO of Centrica plc (LON:CNA) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Centrica
How Does Iain Conn's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Centrica plc has a market cap of UK£4.7b, and reported total annual CEO compensation of UK£2.4m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at UK£940k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from UK£3.1b to UK£9.3b, and discovered that the median CEO total compensation of that group was UK£2.7m.
That means Iain Conn receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see, below, how CEO compensation at Centrica has changed over time.
Is Centrica plc Growing?
Centrica plc has reduced its earnings per share by an average of 44% a year, over the last three years (measured with a line of best fit). Its revenue is up 13% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Centrica plc Been A Good Investment?
With a three year total loss of 51%, Centrica plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Remuneration for Iain Conn is close enough to the median pay for a CEO of a similar sized company .
Returns have been disappointing and the company is not growing its earnings per share. Suffice it to say, we don't think the CEO is underpaid! Shareholders may want to check for free if Centrica insiders are buying or selling shares.
Important note: Centrica may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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