Is Pharos Energy plc's (LON:PHAR) CEO Paid Enough Relative To Peers?




  • In Business
  • 2020-03-26 12:42:40Z
  • By Simply Wall St.
Is Pharos Energy plc\
Is Pharos Energy plc\'s (LON:PHAR) CEO Paid Enough Relative To Peers?  

The CEO of Pharos Energy plc (LON:PHAR) is Ed Story. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Pharos Energy

How Does Ed Story's Compensation Compare With Similar Sized Companies?

According to our data, Pharos Energy plc has a market capitalization of UK£41m, and paid its CEO total annual compensation worth US$2.3m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$924k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$326k.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Pharos Energy stands. Speaking on an industry level, we can see that nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. Readers will want to know that Pharos Energy pays a modest slice of remuneration through salary, as compared to the wider sector.

It would therefore appear that Pharos Energy plc pays Ed Story more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Pharos Energy has changed over time.

Is Pharos Energy plc Growing?

On average over the last three years, Pharos Energy plc has seen earnings per share (EPS) move in a favourable direction by 3.2% each year (using a line of best fit). In the last year, its revenue is up 11%.

I think the revenue growth is good. And the modest growth in earnings per share isn't bad, either. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has Pharos Energy plc Been A Good Investment?

Given the total loss of 89% over three years, many shareholders in Pharos Energy plc are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared the total CEO remuneration paid by Pharos Energy plc, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Moving away from CEO compensation for the moment, we've identified 3 warning signs for Pharos Energy 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.

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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