Erik Engstrom has been the CEO of RELX PLC (LON:REL) since 2009. First, this article will compare CEO compensation with compensation at other large companies. 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.
How Does Erik Engstrom's Compensation Compare With Similar Sized Companies?
Our data indicates that RELX PLC is worth UK£33b, and total annual CEO compensation was reported as UK£8.4m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£1.2m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over UK£6.1b and the median CEO total compensation was UK£3.6m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
Thus we can conclude that Erik Engstrom receives more in total compensation than the median of a group of large companies in the same market as RELX 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 RELX has changed over time.
Is RELX PLC Growing?
On average over the last three years, RELX PLC has grown earnings per share (EPS) by 7.9% each year (using a line of best fit). In the last year, its revenue is up 5.1%.
I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. It could be important to check this free visual depiction of what analysts expect for the future.
Has RELX PLC Been A Good Investment?
RELX PLC has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We examined the amount RELX PLC pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Shifting gears from CEO pay for a second, we've picked out 1 warning sign for RELX that investors should be aware of in a dynamic business environment.
Important note: RELX may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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