We Think DP Eurasia N.V.'s (LON:DPEU) CEO Compensation Package Needs To Be Put Under A Microscope

By
Simply Wall St
Published
June 01, 2021
LSE:DPEU
Source: Shutterstock

Shareholders will probably not be too impressed with the underwhelming results at DP Eurasia N.V. (LON:DPEU) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 08 June 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for DP Eurasia

Comparing DP Eurasia N.V.'s CEO Compensation With the industry

According to our data, DP Eurasia N.V. has a market capitalization of UK£101m, and paid its CEO total annual compensation worth ₺2.7m over the year to December 2020. Notably, that's a decrease of 15% over the year before. Notably, the salary which is ₺2.51m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below UK£141m, we found that the median total CEO compensation was ₺2.9m. So it looks like DP Eurasia compensates Aslan Saranga in line with the median for the industry. Furthermore, Aslan Saranga directly owns UK£5.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary ₺2.5m ₺2.3m 92%
Other ₺217k ₺920k 8%
Total Compensation₺2.7m ₺3.2m100%

Speaking on an industry level, nearly 80% of total compensation represents salary, while the remainder of 20% is other remuneration. DP Eurasia is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
LSE:DPEU CEO Compensation June 2nd 2021

A Look at DP Eurasia N.V.'s Growth Numbers

Over the last three years, DP Eurasia N.V. has shrunk its earnings per share by 99% per year. In the last year, its revenue is up 4.0%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 DP Eurasia N.V. Been A Good Investment?

The return of -55% over three years would not have pleased DP Eurasia N.V. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid 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.

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 DP Eurasia that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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