Yahoo Finance Does Dechra Pharmaceuticals PLC's (LON:DPH) CEO Pay Reflect Performance?
Ian Page has been the CEO of Dechra Pharmaceuticals PLC (LON:DPH) since 2001. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Dechra Pharmaceuticals
How Does Ian Page's Compensation Compare With Similar Sized Companies?
According to our data, Dechra Pharmaceuticals PLC has a market capitalization of UK£2.9b, and paid its CEO total annual compensation worth UK£3.0m over the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£500k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of UK£1.6b to UK£5.1b. The median total CEO compensation was UK£1.9m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Dechra Pharmaceuticals stands. On a sector level, around 72% of total compensation represents salary and 28% is other remuneration. Readers will want to know that Dechra Pharmaceuticals pays a modest slice of remuneration through salary, as compared to the wider sector.
Thus we can conclude that Ian Page receives more in total compensation than the median of a group of companies in the same market, and of similar size to Dechra Pharmaceuticals PLC. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at Dechra Pharmaceuticals, below.
Is Dechra Pharmaceuticals PLC Growing?
Over the last three years Dechra Pharmaceuticals PLC has seen earnings per share (EPS) move in a positive direction by an average of 4.4% per year (using a line of best fit). Its revenue is up 12% over last year.
I would argue that the modest growth in revenue is a notable positive. And the improvement in earnings per share is modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. You might want to check this free visual report on analyst forecasts for future earnings.
Has Dechra Pharmaceuticals PLC Been A Good Investment?
I think that the total shareholder return of 62%, over three years, would leave most Dechra Pharmaceuticals PLC shareholders smiling. 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...
We compared the total CEO remuneration paid by Dechra Pharmaceuticals PLC, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. Looking into other areas, we've picked out 2 warning signs for Dechra Pharmaceuticals that investors should think about before committing capital to this stock.
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.
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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