Hugh Potts has been the CEO of Applied Graphene Materials plc (LON:AGM) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Hugh Potts Compare With Other Companies In The Industry?
Our data indicates that Applied Graphene Materials plc has a market capitalization of UK£23m, and total annual CEO compensation was reported as UK£295k for the year to July 2020. That's a modest increase of 6.5% on the prior year. Notably, the salary which is UK£183.0k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below UK£146m, reported a median total CEO compensation of UK£217k. This suggests that Hugh Potts is paid more than the median for the industry.
On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. Although there is a difference in how total compensation is set, Applied Graphene Materials more or less reflects the market in terms of setting the salary. 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.
Applied Graphene Materials plc's Growth
Applied Graphene Materials plc's earnings per share (EPS) grew 23% per year over the last three years. In the last year, its revenue is up 66%.
Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Applied Graphene Materials plc Been A Good Investment?
With a total shareholder return of 5.5% over three years, Applied Graphene Materials plc has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.
As we touched on above, Applied Graphene Materials plc is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong over three years. We also think investor returns are steady over the same time period. While it may be worth researching further, we don't see a problem with the high CEO pay, given the good EPS growth.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Applied Graphene Materials you should be aware of, and 1 of them doesn't sit too well with us.
Switching gears from Applied Graphene Materials, 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.