How Should Investors Feel About Smart Parking's (ASX:SPZ) CEO Remuneration?

Paul Gillespie has been the CEO of Smart Parking Limited (ASX:SPZ) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Smart Parking.

See our latest analysis for Smart Parking

How Does Total Compensation For Paul Gillespie Compare With Other Companies In The Industry?

At the time of writing, our data shows that Smart Parking Limited has a market capitalization of AU$50m, and reported total annual CEO compensation of AU$533k for the year to June 2020. That's a slightly lower by 5.9% over the previous year. Notably, the salary which is AU$301.7k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$259m, we found that the median total CEO compensation was AU$396k. This suggests that Paul Gillespie is paid more than the median for the industry. Furthermore, Paul Gillespie directly owns AU$362k worth of shares in the company.

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. Although there is a difference in how total compensation is set, Smart Parking more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Smart Parking Limited's Growth

Smart Parking Limited has reduced its earnings per share by 91% a year over the last three years. Its revenue is down 21% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Smart Parking Limited Been A Good Investment?

Since shareholders would have lost about 42% over three years, some Smart Parking Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, Smart Parking pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Smart Parking (1 shouldn't be ignored!) that you should be aware of before investing here.

Important note: Smart Parking 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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