Here's Why We Think Inland Homes plc's (LON:INL) CEO Compensation Looks Fair

Performance at Inland Homes plc (LON:INL) has been rather uninspiring recently and shareholders may be wondering how CEO Stephen Wicks plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 11 March 2021. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Inland Homes

How Does Total Compensation For Stephen Wicks Compare With Other Companies In The Industry?

At the time of writing, our data shows that Inland Homes plc has a market capitalization of UK£132m, and reported total annual CEO compensation of UK£372k for the year to September 2020. That's a notable decrease of 30% on last year. In particular, the salary of UK£312.0k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between UK£71m and UK£286m, we discovered that the median CEO total compensation of that group was UK£591k. That is to say, Stephen Wicks is paid under the industry median. Moreover, Stephen Wicks also holds UK£10m worth of Inland Homes stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	UK£312k	UK£505k	84%
Other	UK£60k	UK£24k	16%
Total Compensation	UK£372k	UK£529k	100%

Talking in terms of the industry, salary represented approximately 49% of total compensation out of all the companies we analyzed, while other remuneration made up 51% of the pie. Inland Homes pays out 84% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Inland Homes plc's Growth

Over the last three years, Inland Homes plc has shrunk its earnings per share by 54% per year. It achieved revenue growth of 4.8% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Inland Homes plc Been A Good Investment?

With a total shareholder return of 1.8% over three years, Inland Homes plc has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

Shareholder returns while positive, need to be looked at along with earnings, which have failed to grow and this could mean that the current momentum may not continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

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 Inland Homes (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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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