Is Kromek Group plc's (LON:KMK) CEO Overpaid Relative To Its Peers?

Simply Wall St
Simply Wall St.

The CEO of Kromek Group plc (LON:KMK) is Arnab Basu. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Kromek Group

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How Does Arnab Basu's Compensation Compare With Similar Sized Companies?

According to our data, Kromek Group plc has a market capitalization of UK£47m, and paid its CEO total annual compensation worth UK£364k over the year to April 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£210k. We examined a group of similar sized companies, with market capitalizations of below UK£170m. The median CEO total compensation in that group is UK£280k.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. Our data reveals that Kromek Group allocates salary in line with the wider market.

So Arnab Basu receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. The graphic below shows how CEO compensation at Kromek Group has changed from year to year.

AIM:KMK CEO Compensation March 27th 2020
AIM:KMK CEO Compensation March 27th 2020

Is Kromek Group plc Growing?

Over the last three years Kromek Group plc has seen earnings per share (EPS) move in a positive direction by an average of 59% per year (using a line of best fit). In the last year, its revenue is up 51%.

This demonstrates that the company has been improving recently. A good result. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.

Has Kromek Group plc Been A Good Investment?

Since shareholders would have lost about 47% over three years, some Kromek Group plc shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Remuneration for Arnab Basu is close enough to the median pay for a CEO of a similar sized company .

We think that the EPS growth is very pleasing, but we cannot say the same about the lacklustre shareholder returns (over the last three years). Considering the the positives we don't think the CEO pays is too high, but it's certainly hard to argue it is too low. CEO compensation is an important area to keep your eyes on, but we've also identified 5 warning signs for Kromek Group (1 is significant!) that you should be aware of before investing here.

If you want to buy a stock that is better than Kromek Group, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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