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How Should Investors React To Dechra Pharmaceuticals PLC's (LON:DPH) CEO Pay?

Simply Wall St

Ian Page became the CEO of Dechra Pharmaceuticals PLC (LON:DPH) in 2001. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Dechra Pharmaceuticals

How Does Ian Page's Compensation Compare With Similar Sized Companies?

Our data indicates that Dechra Pharmaceuticals PLC is worth UK£2.8b, and total annual CEO compensation was reported as UK£3.0m for the year to June 2019. That's less than last year. We think total compensation is more important but we note that the CEO salary is lower, 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£5.2b. The median total CEO compensation was UK£1.8m.

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, below, how CEO compensation at Dechra Pharmaceuticals has changed over time.

LSE:DPH CEO Compensation, October 1st 2019

Is Dechra Pharmaceuticals PLC Growing?

Dechra Pharmaceuticals PLC has increased its earnings per share (EPS) by an average of 21% a year, over the last three years (using a line of best fit). Its revenue is up 18% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Shareholders might be interested in this free visualization of analyst forecasts.

Has Dechra Pharmaceuticals PLC Been A Good Investment?

Boasting a total shareholder return of 102% over three years, Dechra Pharmaceuticals PLC has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared total CEO remuneration at Dechra Pharmaceuticals PLC with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Dechra Pharmaceuticals.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.