This article will reflect on the compensation paid to Donald Brown who has served as CEO of Arden Partners plc (LON:ARDN) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Arden Partners plc's CEO Compensation With the industry
Our data indicates that Arden Partners plc has a market capitalization of UK£2.7m, and total annual CEO compensation was reported as UK£265k for the year to October 2019. That's a notable increase of 12% on last year. Notably, the salary which is UK£228.0k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under UK£151m, the reported median total CEO compensation was UK£246k. This suggests that Arden Partners remunerates its CEO largely in line with the industry average. Furthermore, Donald Brown directly owns UK£60k worth of shares in the company.
Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. Arden Partners pays out 86% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Arden Partners plc's Growth
Arden Partners plc has reduced its earnings per share by 57% a year over the last three years. Its revenue is down 27% over the previous year.
Few shareholders would be pleased to read that EPS have declined. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Arden Partners plc Been A Good Investment?
With a three year total loss of 78% for the shareholders, Arden Partners plc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Arden Partners pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 2 which are a bit unpleasant) in Arden Partners we think you should know about.
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.
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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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