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Is Johnson Matthey Plc (LON:JMAT) Excessively Paying Its CEO?

Simply Wall St

In 2014 Robert MacLeod was appointed CEO of Johnson Matthey Plc (LON:JMAT). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Johnson Matthey

How Does Robert MacLeod's Compensation Compare With Similar Sized Companies?

According to our data, Johnson Matthey Plc has a market capitalization of UK£5.7b, and paid its CEO total annual compensation worth UK£2.8m over the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at UK£818k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from UK£3.1b to UK£9.2b, and discovered that the median CEO total compensation of that group was UK£2.6m.

That means Robert MacLeod receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see, below, how CEO compensation at Johnson Matthey has changed over time.

LSE:JMAT CEO Compensation, January 6th 2020

Is Johnson Matthey Plc Growing?

Johnson Matthey Plc has increased its earnings per share (EPS) by an average of 9.1% a year, over the last three years (using a line of best fit). Its revenue is up 44% over last year.

It's hard to interpret the strong revenue growth as anything other than a positive. With that in mind, the modestly improving EPS seems positive. I'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. It could be important to check this free visual depiction of what analysts expect for the future.

Has Johnson Matthey Plc Been A Good Investment?

With a total shareholder return of 2.3% over three years, Johnson Matthey Plc has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Robert MacLeod is paid around what is normal the leaders of comparable size companies.

We see room for improved growth, as well as fairly unremarkable returns over the last three years. While the CEO may not be underpaid, we don't think the pay is too generous either. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Johnson Matthey.

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.