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Despite Mattioli Woods plc's (LON:MTW) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 29 October 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
Comparing Mattioli Woods plc's CEO Compensation With the industry
At the time of writing, our data shows that Mattioli Woods plc has a market capitalization of UK£404m, and reported total annual CEO compensation of UK£1.5m for the year to May 2021. Notably, that's an increase of 35% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£372k.
On examining similar-sized companies in the industry with market capitalizations between UK£145m and UK£581m, we discovered that the median CEO total compensation of that group was UK£809k. Accordingly, our analysis reveals that Mattioli Woods plc pays Ian Mattioli north of the industry median. Moreover, Ian Mattioli also holds UK£27m worth of Mattioli Woods stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 47% of total compensation out of all the companies we analyzed, while other remuneration made up 53% of the pie. In Mattioli Woods' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Mattioli Woods plc's Growth Numbers
Over the last three years, Mattioli Woods plc has shrunk its earnings per share by 55% per year. In the last year, its revenue is up 7.2%.
Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Mattioli Woods plc Been A Good Investment?
Mattioli Woods plc has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Mattioli Woods you should be aware of, and 1 of them makes us a bit uncomfortable.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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