Should Shareholders Reconsider Arbuthnot Banking Group PLC's (LON:ARBB) CEO Compensation Package?

Arbuthnot Banking Group PLC (LON:ARBB) has not performed well recently and CEO Henry Angest will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 26 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Arbuthnot Banking Group

Comparing Arbuthnot Banking Group PLC's CEO Compensation With the industry

At the time of writing, our data shows that Arbuthnot Banking Group PLC has a market capitalization of UK£165m, and reported total annual CEO compensation of UK£1.3m for the year to December 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is UK£1.20m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from UK£70m to UK£282m, the reported median CEO total compensation was UK£344k. Hence, we can conclude that Henry Angest is remunerated higher than the industry median. What's more, Henry Angest holds UK£82m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	UK£1.2m	UK£1.2m	94%
Other	UK£81k	UK£93k	6%
Total Compensation	UK£1.3m	UK£1.3m	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Arbuthnot Banking Group pays out 94% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Arbuthnot Banking Group PLC's Growth

Arbuthnot Banking Group PLC has reduced its earnings per share by 1.8% a year over the last three years. Its revenue is down 2.7% over the previous year.

Its a bit disappointing to see that the company has failed to grow its EPS. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Arbuthnot Banking Group PLC Been A Good Investment?

Since shareholders would have lost about 23% over three years, some Arbuthnot Banking Group PLC investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

So you may want to check if insiders are buying Arbuthnot Banking Group shares with their own money (free access).

Important note: Arbuthnot Banking Group 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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