Yahoo Finance Is Derwent London Plc's (LON:DLN) CEO Pay Justified?
The CEO of Derwent London Plc (LON:DLN) is John Burns. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Derwent London
How Does John Burns's Compensation Compare With Similar Sized Companies?
Our data indicates that Derwent London Plc is worth UK£3.6b, and total annual CEO compensation is UK£1.7m. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at UK£638k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£1.5b to UK£4.9b. The median total CEO compensation was UK£1.8m.
That means John Burns receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
You can see a visual representation of the CEO compensation at Derwent London, below.
Is Derwent London Plc Growing?
On average over the last three years, Derwent London Plc has shrunk earnings per share by 36% each year (measured with a line of best fit). Its revenue is up 12% over last year.
Unfortunately, earnings per share have trended lower over the last three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Derwent London Plc Been A Good Investment?
With a total shareholder return of 7.0% over three years, Derwent London Plc has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
John Burns is paid around the same as most CEOs of similar size companies.
We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We do not think the CEO pay is a problem, but one might argue that the company should improve returns to shareholders before increasing it. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Derwent London (free visualization of insider trades).
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.
