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How Should Investors React To Petards Group plc's (LON:PEG) CEO Pay?

Simply Wall St

Osman Abdullah has been the CEO of Petards Group plc (LON:PEG) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Petards Group

How Does Osman Abdullah's Compensation Compare With Similar Sized Companies?

Our data indicates that Petards Group plc is worth UK£8.3m, and total annual CEO compensation was reported as UK£111k for the year to December 2018. Notably, the salary of UK£111k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under UK£153m, and the median CEO total compensation was UK£251k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at Petards Group has changed from year to year.

AIM:PEG CEO Compensation, January 7th 2020
AIM:PEG CEO Compensation, January 7th 2020

Is Petards Group plc Growing?

Over the last three years Petards Group plc has shrunk its earnings per share by an average of 12% per year (measured with a line of best fit). It achieved revenue growth of 11% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Petards Group plc Been A Good Investment?

Since shareholders would have lost about 53% over three years, some Petards Group plc shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

It appears that Petards Group plc remunerates its CEO below most similar sized companies.

Osman Abdullah is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. Shareholders may want to check for free if Petards Group insiders are buying or selling shares.

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.

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. Thank you for reading.