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Paul Waterman has been the CEO of Elementis plc (LON:ELM) since 2016. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Paul Waterman's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Elementis plc has a market cap of UK£798m, and is paying total annual CEO compensation of US$1.2m. (This figure is for the year to December 2018). That's less than last year. While we always look at total compensation first, we note that the salary component is less, at US$651k. We examined companies with market caps from UK£317m to UK£1.3b, and discovered that the median CEO total compensation of that group was UK£881k.
It would therefore appear that Elementis plc pays Paul Waterman more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Elementis has changed over time.
Is Elementis plc Growing?
Earnings per share at Elementis plc are much the same as they were three years ago, albeit slightly lower, based on the trend. It achieved revenue growth of 5.0% over the last year.
Unfortunately there is a complete lack of earnings per share improvement, over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Elementis plc Been A Good Investment?
Since shareholders would have lost about 23% over three years, some Elementis plc shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared total CEO remuneration at Elementis plc with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Elementis shares (free trial).
Important note: Elementis 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.
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 email@example.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.