Here's Why It's Unlikely That The Parkmead Group plc's (LON:PMG) CEO Will See A Pay Rise This Year

Shareholders will probably not be too impressed with the underwhelming results at The Parkmead Group plc (LON:PMG) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 22 December 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Parkmead Group

Comparing The Parkmead Group plc's CEO Compensation With the industry

At the time of writing, our data shows that The Parkmead Group plc has a market capitalization of UK£43m, and reported total annual CEO compensation of UK£510k for the year to June 2021. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at UK£506.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below UK£151m, we found that the median total CEO compensation was UK£280k. This suggests that Tom Cross is paid more than the median for the industry. Moreover, Tom Cross also holds UK£10m worth of Parkmead Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	UK£506k	UK£506k	99%
Other	UK£4.0k	UK£3.0k	1%
Total Compensation	UK£510k	UK£509k	100%

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Parkmead Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

The Parkmead Group plc's Growth

Over the last three years, The Parkmead Group plc has shrunk its earnings per share by 42% per year. It saw its revenue drop 12% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. 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 The Parkmead Group plc Been A Good Investment?

With a three year total loss of 26% for the shareholders, The Parkmead Group plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Tom receives almost all of their compensation through a salary. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for Parkmead Group that investors should be aware of in a dynamic business environment.

Switching gears from Parkmead Group, 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.