Here's Why Shareholders Should Examine Schroders plc's (LON:SDR) CEO Compensation Package More Closely

Key Insights

• Schroders will host its Annual General Meeting on 25th of April
• Salary of UK£500.0k is part of CEO Peter Harrison's total remuneration
• Total compensation is 193% above industry average
• Over the past three years, Schroders' EPS fell by 5.6% and over the past three years, the total loss to shareholders 29%

Schroders plc (LON:SDR) has not performed well recently and CEO Peter Harrison will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 25th of April. 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.

Check out our latest analysis for Schroders

Comparing Schroders plc's CEO Compensation With The Industry

At the time of writing, our data shows that Schroders plc has a market capitalization of UK£5.8b, and reported total annual CEO compensation of UK£6.2m for the year to December 2023. We note that's an increase of 32% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at UK£500k.

In comparison with other companies in the British Capital Markets industry with market capitalizations ranging from UK£3.2b to UK£9.6b, the reported median CEO total compensation was UK£2.1m. Accordingly, our analysis reveals that Schroders plc pays Peter Harrison north of the industry median. Furthermore, Peter Harrison directly owns UK£226k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	UK£500k	UK£500k	8%
Other	UK£5.7m	UK£4.2m	92%
Total Compensation	UK£6.2m	UK£4.7m	100%

Talking in terms of the industry, salary represented approximately 53% of total compensation out of all the companies we analyzed, while other remuneration made up 47% of the pie. Schroders pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Schroders plc's Growth

Over the last three years, Schroders plc has shrunk its earnings per share by 5.6% per year. In the last year, its revenue changed by just 0.6%.

Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Schroders plc Been A Good Investment?

Given the total shareholder loss of 29% over three years, many shareholders in Schroders plc are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

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, the board will get the chance to explain the steps it plans to take to improve business performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Schroders that investors should think about before committing capital to this stock.

Switching gears from Schroders, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.