Here's Why Shareholders May Want To Be Cautious With Increasing The Berkeley Group Holdings plc's (LON:BKG) CEO Pay Packet

Despite strong share price growth of 41% for The Berkeley Group Holdings plc (LON:BKG) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 03 September 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.

See our latest analysis for Berkeley Group Holdings

How Does Total Compensation For Rob Perrins Compare With Other Companies In The Industry?

Our data indicates that The Berkeley Group Holdings plc has a market capitalization of UK£5.9b, and total annual CEO compensation was reported as UK£8.0m for the year to April 2021. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£513k.

In comparison with other companies in the industry with market capitalizations ranging from UK£2.9b to UK£8.7b, the reported median CEO total compensation was UK£1.1m. Hence, we can conclude that Rob Perrins is remunerated higher than the industry median. What's more, Rob Perrins holds UK£52m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	UK£513k	UK£551k	6%
Other	UK£7.5m	UK£7.5m	94%
Total Compensation	UK£8.0m	UK£8.0m	100%

On an industry level, roughly 66% of total compensation represents salary and 34% is other remuneration. It's interesting to note that Berkeley Group Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at The Berkeley Group Holdings plc's Growth Numbers

Over the last three years, The Berkeley Group Holdings plc has shrunk its earnings per share by 17% per year. Its revenue is up 15% over the last year.

Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. 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 The Berkeley Group Holdings plc Been A Good Investment?

Boasting a total shareholder return of 41% over three years, The Berkeley Group Holdings plc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Berkeley Group Holdings that you should be aware of before investing.

Important note: Berkeley Group Holdings 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. 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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