Here's Why Shareholders Should Examine Appreciate Group plc's (LON:APP) CEO Compensation Package More Closely

The results at Appreciate Group plc (LON:APP) have been quite disappointing recently and CEO Ian O'Doherty bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 21 September 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 Appreciate Group

Comparing Appreciate Group plc's CEO Compensation With the industry

At the time of writing, our data shows that Appreciate Group plc has a market capitalization of UK£52m, and reported total annual CEO compensation of UK£559k for the year to March 2021. Notably, that's an increase of 43% over the year before. Notably, the salary which is UK£325.0k, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below UK£146m, reported a median total CEO compensation of UK£310k. Hence, we can conclude that Ian O'Doherty is remunerated higher than the industry median. Moreover, Ian O'Doherty also holds UK£74k worth of Appreciate Group stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	UK£325k	UK£325k	58%
Other	UK£234k	UK£65k	42%
Total Compensation	UK£559k	UK£390k	100%

On an industry level, around 80% of total compensation represents salary and 20% is other remuneration. In Appreciate Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader 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 Appreciate Group plc's Growth Numbers

Appreciate Group plc has reduced its earnings per share by 56% a year over the last three years. Its revenue is down 5.3% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Appreciate Group plc Been A Good Investment?

With a total shareholder return of -55% over three years, Appreciate Group plc shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 5 warning signs for Appreciate Group that investors should be aware of in a dynamic business environment.

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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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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