We Think City of London Group plc's (LON:CIN) CEO Compensation Package Needs To Be Put Under A Microscope

City of London Group plc (LON:CIN) has not performed well recently and CEO Michael Goldstein will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 12 October 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for City of London Group

How Does Total Compensation For Michael Goldstein Compare With Other Companies In The Industry?

Our data indicates that City of London Group plc has a market capitalization of UK£76m, and total annual CEO compensation was reported as UK£628k for the year to March 2021. Notably, that's an increase of 75% over the year before. We note that the salary of UK£350.0k makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under UK£148m, the reported median total CEO compensation was UK£485k. From this we gather that Michael Goldstein is paid around the median for CEOs in the industry. Furthermore, Michael Goldstein directly owns UK£70k worth of shares in the company.

Component	2021	2020	Proportion (2021)
Salary	UK£350k	UK£213k	56%
Other	UK£278k	UK£145k	44%
Total Compensation	UK£628k	UK£358k	100%

On an industry level, around 48% of total compensation represents salary and 52% is other remuneration. According to our research, City of London Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

City of London Group plc's Growth

Over the last three years, City of London Group plc has shrunk its earnings per share by 22% per year. Its revenue is down 26% 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 City of London Group plc Been A Good Investment?

With a total shareholder return of -41% over three years, City of London Group plc shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for City of London Group (2 are significant!) that you should be aware of before investing here.

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.

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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