Yahoo Finance Should Shareholders Have Second Thoughts About A Pay Rise For Northamber plc's (LON:NAR) CEO This Year?
Key Insights
Northamber to hold its Annual General Meeting on 20th of December
Salary of UK£33.0k is part of CEO Alex Phillips's total remuneration
The overall pay is 80% below the industry average
Northamber's three-year loss to shareholders was 9.9% while its EPS was down 147% over the past three years
Performance at Northamber plc (LON:NAR) has not been particularly rosy recently and shareholders will likely be holding CEO Alex Phillips and the board accountable for this. At the upcoming AGM on 20th of December, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. From our analysis below, we think CEO compensation looks appropriate for now.
View our latest analysis for Northamber
How Does Total Compensation For Alex Phillips Compare With Other Companies In The Industry?
At the time of writing, our data shows that Northamber plc has a market capitalization of UK£12m, and reported total annual CEO compensation of UK£50k for the year to June 2023. That's a notable decrease of 26% on last year. In particular, the salary of UK£33.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the British Electronic industry with market capitalizations below UK£160m, we found that the median total CEO compensation was UK£254k. That is to say, Alex Phillips is paid under the industry median. Furthermore, Alex Phillips directly owns UK£7.6m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | UK£33k | UK£50k | 66% |
Other | UK£17k | UK£18k | 34% |
Total Compensation | UK£50k | UK£68k | 100% |
Talking in terms of the industry, salary represented approximately 75% of total compensation out of all the companies we analyzed, while other remuneration made up 25% of the pie. Northamber sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Northamber plc's Growth
Over the last three years, Northamber plc has shrunk its earnings per share by 147% per year. In the last year, its revenue is up 1.3%.
The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Northamber plc Been A Good Investment?
With a three year total loss of 9.9% for the shareholders, Northamber plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Northamber you should be aware of, and 1 of them can't be ignored.
Important note: Northamber is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
