Increases to Cedar Woods Properties Limited's (ASX:CWP) CEO Compensation Might Cool off for now

Despite positive share price growth of 27% for Cedar Woods Properties Limited (ASX:CWP) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 03 November 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Cedar Woods Properties

Comparing Cedar Woods Properties Limited's CEO Compensation With the industry

Our data indicates that Cedar Woods Properties Limited has a market capitalization of AU$492m, and total annual CEO compensation was reported as AU$983k for the year to June 2021. That's a slight decrease of 4.0% on the prior year. In particular, the salary of AU$736.3k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$266m and AU$1.1b had a median total CEO compensation of AU$745k. Accordingly, our analysis reveals that Cedar Woods Properties Limited pays Nathan Blackburne north of the industry median. What's more, Nathan Blackburne holds AU$695k worth of shares in the company in their own name.

Component	2021	2020	Proportion (2021)
Salary	AU$736k	AU$737k	75%
Other	AU$247k	AU$287k	25%
Total Compensation	AU$983k	AU$1.0m	100%

Speaking on an industry level, nearly 73% of total compensation represents salary, while the remainder of 27% is other remuneration. There isn't a significant difference between Cedar Woods Properties and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Cedar Woods Properties Limited's Growth Numbers

Over the last three years, Cedar Woods Properties Limited has shrunk its earnings per share by 9.2% per year. It achieved revenue growth of 15% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Cedar Woods Properties Limited Been A Good Investment?

Cedar Woods Properties Limited has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Cedar Woods Properties that investors should think about before committing capital to this stock.

Switching gears from Cedar Woods Properties, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

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