Stephen Harrison has been the CEO of Forterra plc (LON:FORT) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Forterra.
Comparing Forterra plc's CEO Compensation With the industry
At the time of writing, our data shows that Forterra plc has a market capitalization of UK£342m, and reported total annual CEO compensation of UK£1.1m for the year to December 2019. Notably, that's an increase of 26% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£428k.
For comparison, other companies in the same industry with market capitalizations ranging between UK£153m and UK£613m had a median total CEO compensation of UK£414k. Accordingly, our analysis reveals that Forterra plc pays Stephen Harrison north of the industry median. What's more, Stephen Harrison holds UK£219k worth of shares in the company in their own name.
On an industry level, roughly 40% of total compensation represents salary and 60% is other remuneration. Forterra is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Forterra plc's Growth
Forterra plc's earnings per share (EPS) grew 20% per year over the last three years. It achieved revenue growth of 3.4% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Forterra plc Been A Good Investment?
Since shareholders would have lost about 41% over three years, some Forterra plc investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Stephen is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its earnings per share growth, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we'd stop short of calling it inappropriate, we think Stephen is earning a very handsome sum.
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 4 warning signs (and 1 which is a bit unpleasant) in Forterra we think you should know about.
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.
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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