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What Does Arden Partners' (LON:ARDN) CEO Pay Reveal?

Simply Wall St

Donald Brown became the CEO of Arden Partners plc (LON:ARDN) in 2017, 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 assess whether Arden Partners pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Arden Partners

How Does Total Compensation For Donald Brown Compare With Other Companies In The Industry?

According to our data, Arden Partners plc has a market capitalization of UK£3.1m, and paid its CEO total annual compensation worth UK£265k over the year to October 2019. We note that's an increase of 12% above last year. Notably, the salary which is UK£228.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below UK£151m, we found that the median total CEO compensation was UK£249k. From this we gather that Donald Brown is paid around the median for CEOs in the industry. Moreover, Donald Brown also holds UK£70k worth of Arden Partners stock directly under their own name.

Component

2019

2018

Proportion (2019)

Salary

UK£228k

UK£228k

86%

Other

UK£37k

UK£9.0k

14%

Total Compensation

UK£265k

UK£237k

100%

On an industry level, roughly 49% of total compensation represents salary and 51% is other remuneration. Arden Partners pays out 86% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

A Look at Arden Partners plc's Growth Numbers

Arden Partners plc has reduced its earnings per share by 57% a year over the last three years. It saw its revenue drop 27% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Arden Partners plc Been A Good Investment?

Given the total shareholder loss of 74% over three years, many shareholders in Arden Partners plc are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Donald is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Arden Partners (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.