London & Associated Properties PLC (LON:LAS) has not performed well recently and CEO John Heller will probably need to up their game. At the upcoming AGM on 15 June 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
How Does Total Compensation For John Heller Compare With Other Companies In The Industry?
Our data indicates that London & Associated Properties PLC has a market capitalization of UK£9.6m, and total annual CEO compensation was reported as UK£418k for the year to December 2020. We note that's a decrease of 35% compared to last year. In particular, the salary of UK£348.0k, 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£141m, we found that the median total CEO compensation was UK£211k. Hence, we can conclude that John Heller is remunerated higher than the industry median. What's more, John Heller holds UK£210k worth of shares in the company in their own name.
Talking in terms of the industry, salary represented approximately 52% of total compensation out of all the companies we analyzed, while other remuneration made up 48% of the pie. According to our research, London & Associated Properties has allocated a higher percentage of pay to salary in comparison to the wider industry. 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 London & Associated Properties PLC's Growth Numbers
Over the last three years, London & Associated Properties PLC has shrunk its earnings per share by 98% per year. It saw its revenue drop 45% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has London & Associated Properties PLC Been A Good Investment?
With a total shareholder return of -60% over three years, London & Associated Properties PLC shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
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, 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. In our study, we found 2 warning signs for London & Associated Properties you should be aware of, and 1 of them is significant.
Important note: London & Associated Properties is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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