IWG plc (LON:IWG) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 11 May 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for IWG

Comparing IWG plc's CEO Compensation With the industry

According to our data, IWG plc has a market capitalization of UK£3.7b, and paid its CEO total annual compensation worth UK£1.3m over the year to December 2020. We note that's a decrease of 69% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£551k.

For comparison, other companies in the same industry with market capitalizations ranging between UK£2.9b and UK£8.6b had a median total CEO compensation of UK£869k. Accordingly, our analysis reveals that IWG plc pays Mark Dixon north of the industry median. Furthermore, Mark Dixon directly owns UK£1.1b 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 55% of total compensation out of all the companies we analyzed, while other remuneration made up 45% of the pie. It's interesting to note that IWG 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 IWG plc's Growth Numbers

IWG plc has reduced its earnings per share by 118% a year over the last three years. It saw its revenue drop 6.4% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has IWG plc Been A Good Investment?

We think that the total shareholder return of 62%, over three years, would leave most IWG plc shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for IWG (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: IWG 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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