We Think Pittards plc's (LON:PTD) CEO Compensation Package Needs To Be Put Under A Microscope

Pittards plc (LON:PTD) has not performed well recently and CEO Reg Hankey will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 12 May 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Pittards

Comparing Pittards plc's CEO Compensation With the industry

Our data indicates that Pittards plc has a market capitalization of UK£5.9m, and total annual CEO compensation was reported as UK£208k for the year to December 2020. That's slightly lower by 5.5% over the previous year. We note that the salary portion, which stands at UK£196.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under UK£144m, the reported median total CEO compensation was UK£156k. This suggests that Reg Hankey is paid more than the median for the industry. What's more, Reg Hankey holds UK£180k worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	UK£196k	UK£208k	94%
Other	UK£12k	UK£12k	6%
Total Compensation	UK£208k	UK£220k	100%

On an industry level, around 66% of total compensation represents salary and 34% is other remuneration. According to our research, Pittards has allocated a higher percentage of pay to salary in comparison to the wider industry. 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 Pittards plc's Growth Numbers

Pittards plc has reduced its earnings per share by 63% a year over the last three years. It saw its revenue drop 32% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Pittards plc Been A Good Investment?

With a total shareholder return of -45% over three years, Pittards plc shareholders would by and large be disappointed. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Pittards that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

When trading Pittards or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.