Shareholders May Not Be So Generous With Schroders plc's (LON:SDR) CEO Compensation And Here's Why

Despite Schroders plc's (LON:SDR) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 29 April 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Schroders

Comparing Schroders plc's CEO Compensation With the industry

According to our data, Schroders plc has a market capitalization of UK£9.2b, and paid its CEO total annual compensation worth UK£6.3m over the year to December 2020. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£500k.

In comparison with other companies in the industry with market capitalizations over UK£5.8b , the reported median total CEO compensation was UK£3.4m. Hence, we can conclude that Peter Harrison is remunerated higher than the industry median. Moreover, Peter Harrison also holds UK£172k worth of Schroders stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	UK£500k	UK£500k	8%
Other	UK£5.8m	UK£6.0m	92%
Total Compensation	UK£6.3m	UK£6.5m	100%

On an industry level, around 49% of total compensation represents salary and 51% is other remuneration. It's interesting to note that Schroders allocates a smaller portion of compensation to salary in comparison to the broader 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 6.6% per year. Revenue was pretty flat on last year.

Few shareholders would be pleased to read that EPS have declined. 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?

Schroders plc has served shareholders reasonably well, with a total return of 21% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

So you may want to check if insiders are buying Schroders shares with their own money (free access).

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.

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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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