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Andrew Denton became the CEO of Alfa Financial Software Holdings PLC (LON:ALFA) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Andrew Denton Compare With Other Companies In The Industry?
Our data indicates that Alfa Financial Software Holdings PLC has a market capitalization of UK£189m, and total annual CEO compensation was reported as UK£338k for the year to December 2019. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at UK£322.0k constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between UK£79m and UK£316m, we discovered that the median CEO total compensation of that group was UK£395k. From this we gather that Andrew Denton is paid around the median for CEOs in the industry.
Talking in terms of the industry, salary represented approximately 67% of total compensation out of all the companies we analyzed, while other remuneration made up 33% of the pie. Alfa Financial Software Holdings has gone down a largely traditional route, paying Andrew Denton a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Alfa Financial Software Holdings PLC's Growth
Alfa Financial Software Holdings PLC's earnings per share (EPS) grew 8.0% per year over the last three years. It saw its revenue drop 9.2% over the last year.
We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Alfa Financial Software Holdings PLC Been A Good Investment?
Given the total shareholder loss of 87% over three years, many shareholders in Alfa Financial Software Holdings PLC are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Andrew receives almost all of their compensation through a salary. As we touched on above, Alfa Financial Software Holdings PLC is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good when you place it against the backdrop of negative shareholder returns and flat earnings growth. CEO pay isn't exceptionally high, but considering poor performance, shareholders will likely hold off support for a raise until results improve.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Alfa Financial Software Holdings (1 is potentially serious!) that you should be aware of before investing here.
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.
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