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Is United Carpets Group plc's (LON:UCG) CEO Salary Justified?

Simply Wall St

Paul Eyre is the CEO of United Carpets Group plc (LON:UCG). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for United Carpets Group

How Does Paul Eyre's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that United Carpets Group plc has a market cap of UK£4.4m, and is paying total annual CEO compensation of UK£329k. (This number is for the twelve months until March 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£200k. We looked at a group of companies with market capitalizations under UK£161m, and the median CEO total compensation was UK£253k.

Thus we can conclude that Paul Eyre receives more in total compensation than the median of a group of companies in the same market, and of similar size to United Carpets Group 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 a visual representation of the CEO compensation at United Carpets Group, below.

AIM:UCG CEO Compensation, July 24th 2019

Is United Carpets Group plc Growing?

Over the last three years United Carpets Group plc has shrunk its earnings per share by an average of 5.3% per year (measured with a line of best fit). It achieved revenue growth of 7.6% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has United Carpets Group plc Been A Good Investment?

Given the total loss of 40% over three years, many shareholders in United Carpets Group plc are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount United Carpets Group 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.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! Shareholders may want to check for free if United Carpets 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.

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.

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. Thank you for reading.