We Think Shareholders May Want To Consider A Review Of Chesnara plc's (LON:CSN) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at Chesnara plc (LON:CSN) recently. At the upcoming AGM on 18 May 2021, shareholders can hear from the board including their plans for turning around performance. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Chesnara

How Does Total Compensation For John Deane Compare With Other Companies In The Industry?

Our data indicates that Chesnara plc has a market capitalization of UK£411m, and total annual CEO compensation was reported as UK£782k for the year to December 2020. Notably, that's a decrease of 31% over the year before. In particular, the salary of UK£458.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from UK£141m to UK£565m, we found that the median CEO total compensation was UK£561k. Hence, we can conclude that John Deane is remunerated higher than the industry median. What's more, John Deane holds UK£359k worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	UK£458k	UK£449k	59%
Other	UK£324k	UK£682k	41%
Total Compensation	UK£782k	UK£1.1m	100%

Speaking on an industry level, nearly 39% of total compensation represents salary, while the remainder of 61% is other remuneration. Chesnara is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Chesnara plc's Growth Numbers

Over the last three years, Chesnara plc has shrunk its earnings per share by 35% per year. In the last year, its revenue is down 56%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Chesnara plc Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Chesnara 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...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Chesnara (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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