This article will reflect on the compensation paid to Simon Perkins who has served as CEO of McKay Securities Plc (LON:MCKS) since 2003. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Note: The company does not report funds from operations, and as a result, we have used earnings per share in our analysis.
How Does Total Compensation For Simon Perkins Compare With Other Companies In The Industry?
According to our data, McKay Securities Plc has a market capitalization of UK£184m, and paid its CEO total annual compensation worth UK£891k over the year to March 2020. That’s a notable increase of 11% on last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at UK£403k.
For comparison, other companies in the same industry with market capitalizations ranging between UK£75m and UK£302m had a median total CEO compensation of UK£569k. Accordingly, our analysis reveals that McKay Securities Plc pays Simon Perkins north of the industry median. What’s more, Simon Perkins holds UK£678k worth of shares in the company in their own name.
Talking in terms of the industry, salary represented approximately 38% of total compensation out of all the companies we analyzed, while other remuneration made up 62% of the pie. McKay Securities pays out 45% of remuneration in the form of a salary, significantly higher than the industry average. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.
A Look at McKay Securities Plc’s Growth Numbers
Over the last three years, McKay Securities Plc has shrunk its earnings per share by 23% per year. In the last year, its revenue is up 16%.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has McKay Securities Plc Been A Good Investment?
McKay Securities Plc has generated a total shareholder return of 1.6% over three years, so most shareholders wouldn’t be too disappointed. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
As we noted earlier, McKay Securities pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Be that as it may, revenue figures are showing some positive trends recently. Shareholder returns have also grown during this time, but haven’t been as impressive. 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.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for McKay Securities you should be aware of, and 2 of them can’t be ignored.
Important note: McKay Securities is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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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