Paul Gillespie became the CEO of Smart Parking Limited (ASX:SPZ) in 2013, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns 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$37m, and reported total annual CEO compensation of AU$533k for the year to June 2020. That's a slight decrease of 5.9% on the prior 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$280m, we found that the median total CEO compensation was AU$366k. Accordingly, our analysis reveals that Smart Parking Limited pays Paul Gillespie north of the industry median. Moreover, Paul Gillespie also holds AU$272k worth of Smart Parking stock directly under their own name.
Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. Smart Parking is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Smart Parking Limited's Growth Numbers
Over the last three years, Smart Parking Limited has shrunk its earnings per share by 91% per year. In the last year, its revenue is down 21%.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Smart Parking Limited Been A Good Investment?
With a three year total loss of 55% for the shareholders, Smart Parking Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Smart Parking pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
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. We've identified 1 warning sign for Smart Parking that investors should be aware of in a dynamic business environment.
Switching gears from Smart Parking, 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.
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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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