This article will reflect on the compensation paid to Craig Hayman who has served as CEO of AVEVA Group plc (LON:AVV) since 2018. This analysis will also assess whether AVEVA Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing AVEVA Group plc's CEO Compensation With the industry
At the time of writing, our data shows that AVEVA Group plc has a market capitalization of UK£10b, and reported total annual CEO compensation of UK£5.4m for the year to March 2020. Notably, that's a decrease of 26% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£718k.
On comparing similar companies in the industry with market capitalizations above UK£5.7b, we found that the median total CEO compensation was UK£5.4m. So it looks like AVEVA Group compensates Craig Hayman in line with the median for the industry. Furthermore, Craig Hayman directly owns UK£4.2m 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 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. It's interesting to note that AVEVA Group 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 AVEVA Group plc's Growth Numbers
Over the last three years, AVEVA Group plc has shrunk its earnings per share by 18% per year. In the last year, its revenue is down 5.8%.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has AVEVA Group plc Been A Good Investment?
We think that the total shareholder return of 141%, over three years, would leave most AVEVA Group plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, AVEVA Group pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you see that EPS growth over the last three years has been negative. But on the bright side, shareholder returns have moved northward during the same period. We do not think CEO compensation is a problem, but shareholders might think performance needs to be improved before paying any more.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 5 warning signs (and 1 which doesn't sit too well with us) in AVEVA Group we think you should know about.
Important note: AVEVA 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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