What We Learned About DCC's (LON:DCC) CEO Pay

Donal Murphy became the CEO of DCC plc (LON:DCC) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether DCC pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for DCC

How Does Total Compensation For Donal Murphy Compare With Other Companies In The Industry?

Our data indicates that DCC plc has a market capitalization of UK£6.0b, and total annual CEO compensation was reported as €2.3m for the year to March 2020. Notably, that's a decrease of 13% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at €756k.

On comparing similar companies from the same industry with market caps ranging from UK£3.1b to UK£9.3b, we found that the median CEO total compensation was €4.3m. This suggests that Donal Murphy is paid below the industry median. Moreover, Donal Murphy also holds UK£8.5m worth of DCC stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 45% of total compensation represents salary and 55% is other remuneration. DCC sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

DCC plc's Growth

DCC plc's earnings per share (EPS) grew 3.3% per year over the last three years. Its revenue is down 3.1% over the previous year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has DCC plc Been A Good Investment?

Since shareholders would have lost about 11% over three years, some DCC plc investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, DCC pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But the company isn't growing and total shareholder returns have been disappointing. We're not critical of the remuneration Donal receives, but it would be good to see improved returns to shareholders before compensation grows too much.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for DCC that you should be aware of before investing.

Switching gears from DCC, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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