Shareholders Will Probably Hold Off On Increasing Pioneer Credit Limited's (ASX:PNC) CEO Compensation For The Time Being

Key Insights

• Pioneer Credit will host its Annual General Meeting on 31st of October
• Total pay for CEO Keith John includes AU$778.5k salary
• The overall pay is 169% above the industry average
• Pioneer Credit's three-year loss to shareholders was 50% while its EPS grew by 54% over the past three years

In the past three years, the share price of Pioneer Credit Limited (ASX:PNC) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 31st of October could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Pioneer Credit

How Does Total Compensation For Keith John Compare With Other Companies In The Industry?

According to our data, Pioneer Credit Limited has a market capitalization of AU$36m, and paid its CEO total annual compensation worth AU$1.3m over the year to June 2023. We note that's a decrease of 16% compared to last year. We note that the salary portion, which stands at AU$778.5k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Australian Diversified Financial industry with market capitalizations below AU$315m, reported a median total CEO compensation of AU$483k. This suggests that Keith John is paid more than the median for the industry. What's more, Keith John holds AU$4.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	AU$779k	AU$778k	60%
Other	AU$519k	AU$762k	40%
Total Compensation	AU$1.3m	AU$1.5m	100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. Pioneer Credit is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Pioneer Credit Limited's Growth Numbers

Pioneer Credit Limited has seen its earnings per share (EPS) increase by 54% a year over the past three years. Its revenue is up 93% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Pioneer Credit Limited Been A Good Investment?

Few Pioneer Credit Limited shareholders would feel satisfied with the return of -50% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 3 warning signs for Pioneer Credit you should be aware of, and 1 of them is a bit concerning.

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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.