Midwich Group plc (LON:MIDW) has not performed well recently and CEO Stephen Fenby will probably need to up their game. At the upcoming AGM on 10 May 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Midwich Group

Comparing Midwich Group plc's CEO Compensation With the industry

According to our data, Midwich Group plc has a market capitalization of UK£418m, and paid its CEO total annual compensation worth UK£260k over the year to December 2020. We note that's a decrease of 35% compared to last year. Notably, the salary which is UK£237.0k, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between UK£144m and UK£575m, we discovered that the median CEO total compensation of that group was UK£361k. This suggests that Midwich Group remunerates its CEO largely in line with the industry average. What's more, Stephen Fenby holds UK£92m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. Midwich Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Midwich Group plc's Growth

Midwich Group plc has reduced its earnings per share by 41% a year over the last three years. It achieved revenue growth of 3.7% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Midwich Group plc Been A Good Investment?

With a three year total loss of 21% for the shareholders, Midwich Group plc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Midwich Group that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.