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What Can We Learn About Berkeley Group Holdings' (LON:BKG) CEO Compensation?

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Simply Wall St
·4 min read
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Rob Perrins became the CEO of The Berkeley Group Holdings plc (LON:BKG) in 2009, 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.

View our latest analysis for Berkeley Group Holdings

Comparing The Berkeley Group Holdings plc's CEO Compensation With the industry

At the time of writing, our data shows that The Berkeley Group Holdings plc has a market capitalization of UK£5.6b, and reported total annual CEO compensation of UK£8.0m for the year to April 2020. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£551k.

For comparison, other companies in the same industry with market capitalizations ranging between UK£2.9b and UK£8.8b had a median total CEO compensation of UK£2.8m. This suggests that Rob Perrins is paid more than the median for the industry. What's more, Rob Perrins holds UK£45m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

UK£551k

UK£545k

7%

Other

UK£7.5m

UK£7.3m

93%

Total Compensation

UK£8.0m

UK£7.8m

100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that Berkeley Group Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at The Berkeley Group Holdings plc's Growth Numbers

Over the last three years, The Berkeley Group Holdings plc has shrunk its earnings per share by 19% per year. In the last year, its revenue is down 16%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has The Berkeley Group Holdings plc Been A Good Investment?

With a total shareholder return of 18% over three years, The Berkeley Group Holdings 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.

In Summary...

As we noted earlier, Berkeley Group Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, EPS has not been growing sufficiently to impress us, over the last three years. While shareholder returns are acceptable, they don't delight. So we think more research is needed, but we don't think the CEO is underpaid.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Berkeley Group Holdings that investors should look into moving forward.

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.

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