Peter Harrison has been the CEO of Schroders plc (LON:SDR) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Schroders
How Does Total Compensation For Peter Harrison Compare With Other Companies In The Industry?
Our data indicates that Schroders plc has a market capitalization of UK£8.7b, and total annual CEO compensation was reported as UK£6.5m for the year to December 2019. That's a slight decrease of 3.7% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£500k.
On comparing similar companies in the industry with market capitalizations above UK£5.9b, we found that the median total CEO compensation was UK£2.7m. Accordingly, our analysis reveals that Schroders plc pays Peter Harrison north of the industry median. Furthermore, Peter Harrison directly owns UK£165k worth of shares in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | UK£500k | UK£500k | 8% |
| Other | UK£6.0m | UK£6.2m | 92% |
| Total Compensation | UK£6.5m | UK£6.7m | 100% |
On an industry level, around 49% of total compensation represents salary and 51% is other remuneration. Schroders sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Schroders plc's Growth
Over the last three years, Schroders plc has shrunk its earnings per share by 4.9% per year. Revenue was pretty flat on last year.
Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Schroders plc Been A Good Investment?
Schroders plc has generated a total shareholder return of 9.9% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As we touched on above, Schroders plc is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, EPS has not grown in three years, failing to impress us. And shareholder returns are decent but not great. So you can understand why we do not think CEO compensation is particularly modest!
If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Schroders.
Important note: Schroders is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. 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.
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About LSE:SDR
Established dividend payer and good value.
