How Much Is Melrose Industries PLC (LON:MRO) Paying Its CEO?

This article will reflect on the compensation paid to Simon Peckham who has served as CEO of Melrose Industries PLC (LON:MRO) since 2012. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Melrose Industries

How Does Total Compensation For Simon Peckham Compare With Other Companies In The Industry?

According to our data, Melrose Industries PLC has a market capitalization of UK£4.9b, and paid its CEO total annual compensation worth UK£976k over the year to December 2019. We note that's a small decrease of 7.0% on last year. In particular, the salary of UK£520.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from UK£3.1b to UK£9.2b, we found that the median CEO total compensation was UK£2.1m. Accordingly, Melrose Industries pays its CEO under the industry median. Furthermore, Simon Peckham directly owns UK£18m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. Melrose Industries 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.

Melrose Industries PLC's Growth

Over the last three years, Melrose Industries PLC has shrunk its earnings per share by 25% per year. Its revenue is up 35% over the last year.

Investors would be a bit wary of companies that have lower earnings But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Melrose Industries PLC Been A Good Investment?

Given the total shareholder loss of 54% over three years, many shareholders in Melrose Industries PLC are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Melrose Industries PLC is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But shareholder returns and earnings growth over the past three years are negative, which is cause for concern. On the flip side, recent revenue growth has been positive. Although it's fair to say CEO compensation is modest, shareholders might want to see healthier investor returns before thinking Simon deserves a raise.

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. That's why we did our research, and identified 3 warning signs for Melrose Industries (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Melrose Industries, 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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