This article will reflect on the compensation paid to Alison Brittain who has served as CEO of Whitbread PLC (LON:WTB) since 2016. This analysis will also assess whether Whitbread pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Whitbread PLC's CEO Compensation With the industry
According to our data, Whitbread PLC has a market capitalization of UK£6.3b, and paid its CEO total annual compensation worth UK£2.6m over the year to February 2020. We note that's a decrease of 53% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£871k.
For comparison, other companies in the same industry with market capitalizations ranging between UK£3.0b and UK£9.0b had a median total CEO compensation of UK£4.5m. In other words, Whitbread pays its CEO lower than the industry median. Furthermore, Alison Brittain directly owns UK£2.0m worth of shares in the company.
On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. In Whitbread's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Whitbread PLC's Growth Numbers
Over the last three years, Whitbread PLC has shrunk its earnings per share by 81% per year. It saw its revenue drop 40% over the last year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. 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 Whitbread PLC Been A Good Investment?
Since shareholders would have lost about 1.7% over three years, some Whitbread PLC investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, Whitbread pays its CEO lower than the norm for similar-sized companies belonging to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Alison is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for Whitbread you should be aware of, and 1 of them is potentially serious.
Important note: Whitbread 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.
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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