Yahoo Finance Why Ilika's (LON:IKA) CEO Pay Matters
The CEO of Ilika plc (LON:IKA) is Graeme Purdy, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Ilika pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Ilika
Comparing Ilika plc's CEO Compensation With the industry
According to our data, Ilika plc has a market capitalization of UK£308m, and paid its CEO total annual compensation worth UK£266k over the year to April 2020. That's a slightly lower by 5.6% over the previous year. We note that the salary portion, which stands at UK£204.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations ranging from UK£146m to UK£583m, the reported median CEO total compensation was UK£357k. From this we gather that Graeme Purdy is paid around the median for CEOs in the industry. Moreover, Graeme Purdy also holds UK£1.7m worth of Ilika stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | UK£204k | UK£193k | 77% |
Other | UK£62k | UK£89k | 23% |
Total Compensation | UK£266k | UK£282k | 100% |
On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Ilika is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Ilika plc's Growth
Ilika plc has seen its earnings per share (EPS) increase by 14% a year over the past three years. In the last year, its revenue is down 13%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Ilika plc Been A Good Investment?
Most shareholders would probably be pleased with Ilika plc for providing a total return of 806% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
As we noted earlier, Ilika pays its CEO in line with similar-sized companies belonging to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Graeme is compensated rather modestly, given the solid company performance! Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Ilika that you should be aware of before investing.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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. 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.
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