Yahoo Finance Does Pearson plc's (LON:PSON) CEO Salary Reflect Performance?
John Fallon has been the CEO of Pearson plc (LON:PSON) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. 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.
View our latest analysis for Pearson
How Does John Fallon's Compensation Compare With Similar Sized Companies?
According to our data, Pearson plc has a market capitalization of UK£4.9b, and paid its CEO total annual compensation worth UK£3.1m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at UK£795k. 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£3.1b to UK£9.2b. The median total CEO compensation was UK£2.7m.
So John Fallon is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at Pearson, below.
Is Pearson plc Growing?
On average over the last three years, Pearson plc has grown earnings per share (EPS) by 92% each year (using a line of best fit). It saw its revenue drop 5.5% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.
Has Pearson plc Been A Good Investment?
Given the total loss of 11% over three years, many shareholders in Pearson plc are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
John Fallon is paid around what is normal the leaders of comparable size companies.
We think that the EPS growth is very pleasing, but it's disappointing to see negative shareholder returns over three years. We'd be surprised if shareholders want to see a pay rise for the CEO, but we'd stop short of calling their pay too generous. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Pearson.
If you want to buy a stock that is better than Pearson, this free list of high return, low debt companies is a great place to look.
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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