Yahoo Finance Here's Why Shareholders May Want To Be Cautious With Increasing Jersey Electricity plc's (LON:JEL) CEO Pay Packet
Key Insights
Jersey Electricity will host its Annual General Meeting on 8th of March
CEO Chris Ambler's total compensation includes salary of UK£263.9k
The total compensation is 46% higher than the average for the industry
Jersey Electricity's EPS declined by 11% over the past three years while total shareholder return over the past three years was 22%
The share price of Jersey Electricity plc (LON:JEL) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 8th of March. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
Check out our latest analysis for Jersey Electricity
How Does Total Compensation For Chris Ambler Compare With Other Companies In The Industry?
At the time of writing, our data shows that Jersey Electricity plc has a market capitalization of UK£151m, and reported total annual CEO compensation of UK£425k for the year to September 2022. That's just a smallish increase of 3.1% on last year. We note that the salary portion, which stands at UK£263.9k constitutes the majority of total compensation received by the CEO.
On comparing similar companies from the the United Kingdom Electric Utilities industry with market caps ranging from UK£83m to UK£332m, we found that the median CEO total compensation was UK£291k. Accordingly, our analysis reveals that Jersey Electricity plc pays Chris Ambler north of the industry median.
Component | 2022 | 2021 | Proportion (2022) |
Salary | UK£264k | UK£256k | 62% |
Other | UK£161k | UK£156k | 38% |
Total Compensation | UK£425k | UK£412k | 100% |
Speaking on an industry level, nearly 55% of total compensation represents salary, while the remainder of 45% is other remuneration. According to our research, Jersey Electricity has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Jersey Electricity plc's Growth Numbers
Jersey Electricity plc has reduced its earnings per share by 11% a year over the last three years. In the last year, its revenue is down 1.0%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Jersey Electricity plc Been A Good Investment?
Jersey Electricity plc has generated a total shareholder return of 22% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
To Conclude...
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Jersey Electricity that investors should be aware of in a dynamic business environment.
Important note: Jersey Electricity is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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