Pete Redfern has been the CEO of Taylor Wimpey plc (LON:TW.) since 2007, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Taylor Wimpey pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Taylor Wimpey plc's CEO Compensation With the industry
According to our data, Taylor Wimpey plc has a market capitalization of UK£4.3b, and paid its CEO total annual compensation worth UK£3.0m over the year to December 2019. That's a slightly lower by 7.6% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£870k.
On examining similar-sized companies in the industry with market capitalizations between UK£3.0b and UK£9.1b, we discovered that the median CEO total compensation of that group was UK£3.0m. From this we gather that Pete Redfern is paid around the median for CEOs in the industry. Furthermore, Pete Redfern directly owns UK£2.3m worth of shares in the company.
Talking in terms of the industry, salary represented approximately 44% of total compensation out of all the companies we analyzed, while other remuneration made up 56% of the pie. It's interesting to note that Taylor Wimpey allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Taylor Wimpey plc's Growth Numbers
Taylor Wimpey plc has reduced its earnings per share by 9.7% a year over the last three years. It saw its revenue drop 18% over the last year.
The decline in earnings is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Taylor Wimpey plc Been A Good Investment?
Given the total shareholder loss of 23% over three years, many shareholders in Taylor Wimpey plc are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Pete is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, earnings growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Taylor Wimpey that you should be aware of before investing.
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. 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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