Tom Cross became the CEO of The Parkmead Group plc (LON:PMG) in 2011, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Tom Cross Compare With Other Companies In The Industry?
Our data indicates that The Parkmead Group plc has a market capitalization of UK£42m, and total annual CEO compensation was reported as UK£509k for the year to June 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of UK£506.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below UK£148m, we found that the median total CEO compensation was UK£281k. Hence, we can conclude that Tom Cross is remunerated higher than the industry median. Furthermore, Tom Cross directly owns UK£10m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. Parkmead Group has gone down a largely traditional route, paying Tom Cross a high salary, giving it preference over non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at The Parkmead Group plc's Growth Numbers
The Parkmead Group plc's earnings per share (EPS) grew 76% per year over the last three years. Its revenue is down 51% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 The Parkmead Group plc Been A Good Investment?
With a total shareholder return of 6.1% over three years, The Parkmead Group plc has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.
Parkmead Group pays its CEO a majority of compensation through a salary. As previously discussed, Tom is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed us with its EPS growth, over three years. We also think investor returns are steady over the same time period. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Parkmead Group that you should be aware of before investing.
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. 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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