This article will reflect on the compensation paid to Luke Ellis who has served as CEO of Man Group plc (LON:EMG) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Man Group plc's CEO Compensation With the industry
At the time of writing, our data shows that Man Group plc has a market capitalization of UK£1.7b, and reported total annual CEO compensation of US$2.8m for the year to December 2019. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.
On examining similar-sized companies in the industry with market capitalizations between UK£774m and UK£2.5b, we discovered that the median CEO total compensation of that group was US$1.2m. Accordingly, our analysis reveals that Man Group plc pays Luke Ellis north of the industry median. Furthermore, Luke Ellis directly owns UK£6.5m 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 49% of total compensation out of all the companies we analyzed, while other remuneration made up 51% of the pie. In Man Group'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.
Man Group plc's Growth
Over the past three years, Man Group plc has seen its earnings per share (EPS) grow by 42% per year. In the last year, its revenue is up 2.2%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Man Group plc Been A Good Investment?
With a three year total loss of 28% for the shareholders, Man Group plc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Luke is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Luke is earning a very handsome sum.
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. We've identified 1 warning sign for Man Group that investors should be aware of in a dynamic business environment.
Important note: Man Group 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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