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John Arnold became the CEO of Circle Property Plc (LON:CRC) 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 John Arnold Compare With Other Companies In The Industry?
Our data indicates that Circle Property Plc has a market capitalization of UK£50m, and total annual CEO compensation was reported as UK£672k for the year to March 2020. We note that's an increase of 9.8% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£215k.
For comparison, other companies in the industry with market capitalizations below UK£146m, reported a median total CEO compensation of UK£321k. Accordingly, our analysis reveals that Circle Property Plc pays John Arnold north of the industry median. Furthermore, John Arnold directly owns UK£1.8m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 51% of total compensation represents salary, while the remainder of 49% is other remuneration. It's interesting to note that Circle Property allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Circle Property Plc's Growth
Circle Property Plc has reduced its earnings per share by 46% a year over the last three years. It achieved revenue growth of 34% over the last year.
The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Circle Property Plc Been A Good Investment?
With a total shareholder return of 16% over three years, Circle Property Plc shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we touched on above, Circle Property Plc is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, revenue figures for the company are growing at a nice pace over the last year. Although shareholder returns are also growing during this time, they have not impressed us as much. EPS growth, on the other hand, is negative, a concerning trend. While the CEO may not be underpaid, we don't think the pay is too generous either.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 6 warning signs for Circle Property you should be aware of, and 2 of them don't sit too well with us.
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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