Donald Brown has been the CEO of Arden Partners plc (LON:ARDN) since 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Donald Brown's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Arden Partners plc has a market cap of UK£1.3m, and reported total annual CEO compensation of UK£265k for the year to October 2019. We think total compensation is more important but we note that the CEO salary is lower, at UK£228k. We looked at a group of companies with market capitalizations under UK£163m, and the median CEO total compensation was UK£276k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Arden Partners stands. Speaking on an industry level, we can see that nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. So it seems like there isn't a significant difference between Arden Partners and the broader market, in terms of salary allocation in the overall compensation package.
So Donald Brown receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. You can see a visual representation of the CEO compensation at Arden Partners, below.
Is Arden Partners plc Growing?
Arden Partners plc has reduced its earnings per share by an average of 54% a year, over the last three years (measured with a line of best fit). Its revenue is down 10% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Arden Partners plc Been A Good Investment?
With a three year total loss of 85%, Arden Partners plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
Donald Brown is paid around what is normal for the leaders of comparable size companies.
Returns have been disappointing and the company is not growing its earnings per share. Suffice it to say, we don't think the CEO is underpaid! Shifting gears from CEO pay for a second, we've spotted 3 warning signs for Arden Partners you should be aware of, and 2 of them are significant.
Important note: Arden Partners may not be the best stock to buy. 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. 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. Thank you for reading.
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