Ashley Almanza became the CEO of G4S plc (LON:GFS) in 2013. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Ashley Almanza's Compensation Compare With Similar Sized Companies?
According to our data, G4S plc has a market capitalization of UK£2.9b, and paid its CEO total annual compensation worth UK£2.9m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at UK£959k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from UK£1.6b to UK£5.2b, and the median CEO total compensation was UK£1.8m.
It would therefore appear that G4S plc pays Ashley Almanza more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at G4S has changed from year to year.
Is G4S plc Growing?
Over the last three years G4S plc has shrunk its earnings per share by an average of 18% per year (measured with a line of best fit). In the last year, its revenue is up 1.7%.
Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has G4S plc Been A Good Investment?
With a three year total loss of 5.7%, G4S plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount G4S plc pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
We think many shareholders would be underwhelmed with the business growth over the last three years. Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling G4S shares (free trial).
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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.