The results at Victrex plc (LON:VCT) have been quite disappointing recently and CEO Jakob Sigurdsson bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 10 February 2023. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
How Does Total Compensation For Jakob Sigurdsson Compare With Other Companies In The Industry?
According to our data, Victrex plc has a market capitalization of UK£1.7b, and paid its CEO total annual compensation worth UK£1.4m over the year to September 2022. That's slightly lower by 5.6% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£615k.
On comparing similar companies from the British Chemicals industry with market caps ranging from UK£830m to UK£2.7b, we found that the median CEO total compensation was UK£1.3m. So it looks like Victrex compensates Jakob Sigurdsson in line with the median for the industry. Moreover, Jakob Sigurdsson also holds UK£601k worth of Victrex stock directly under their own name.
On an industry level, roughly 55% of total compensation represents salary and 45% is other remuneration. Victrex sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Victrex plc's Growth
Over the last three years, Victrex plc has shrunk its earnings per share by 6.5% per year. In the last year, its revenue is up 11%.
The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Victrex plc Been A Good Investment?
With a three year total loss of 8.5% for the shareholders, Victrex plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Victrex that you should be aware of before investing.
Important note: Victrex 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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