We Think Some Shareholders May Hesitate To Increase Circle Property Plc's (LON:CRC) CEO Compensation

Despite strong share price growth of 38% for Circle Property Plc (LON:CRC) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 09 March 2022. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Circle Property

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

At the time of writing, our data shows that Circle Property Plc has a market capitalization of UK£65m, and reported total annual CEO compensation of UK£676k for the year to March 2021. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£215k.

On comparing similar-sized companies in the industry with market capitalizations below UK£150m, we found that the median total CEO compensation was UK£371k. Hence, we can conclude that John Arnold is remunerated higher than the industry median. Moreover, John Arnold also holds UK£2.4m worth of Circle Property 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£215k	UK£215k	32%
Other	UK£461k	UK£457k	68%
Total Compensation	UK£676k	UK£672k	100%

Talking in terms of the industry, salary represented approximately 56% of total compensation out of all the companies we analyzed, while other remuneration made up 44% of the pie. In Circle Property's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.

Circle Property Plc's Growth

Circle Property Plc has reduced its earnings per share by 114% a year over the last three years. It saw its revenue drop 11% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Circle Property Plc Been A Good Investment?

We think that the total shareholder return of 38%, over three years, would leave most Circle Property Plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Circle Property (2 are significant!) that you should be aware of before investing here.

Switching gears from Circle Property, 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.