Duncan Sinclair has been the CEO of Mountview Estates P.L.C. (LON:MTVW) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Mountview Estates
Comparing Mountview Estates P.L.C.'s CEO Compensation With the industry
At the time of writing, our data shows that Mountview Estates P.L.C. has a market capitalization of UK£419m, and reported total annual CEO compensation of UK£1.0m for the year to March 2020. That's a fairly small increase of 5.3% over the previous year. Notably, the salary which is UK£555.0k, represents most of the total compensation being paid.
On examining similar-sized companies in the industry with market capitalizations between UK£151m and UK£605m, we discovered that the median CEO total compensation of that group was UK£719k. Hence, we can conclude that Duncan Sinclair is remunerated higher than the industry median. Furthermore, Duncan Sinclair directly owns UK£58m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | UK£555k | UK£530k | 54% |
| Other | UK£472k | UK£445k | 46% |
| Total Compensation | UK£1.0m | UK£975k | 100% |
Speaking on an industry level, nearly 51% of total compensation represents salary, while the remainder of 49% is other remuneration. Although there is a difference in how total compensation is set, Mountview Estates more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Mountview Estates P.L.C.'s Growth Numbers
Mountview Estates P.L.C. has reduced its earnings per share by 9.3% a year over the last three years. It saw its revenue drop 12% over the last year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Mountview Estates P.L.C. Been A Good Investment?
Mountview Estates P.L.C. has generated a total shareholder return of 6.2% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As we noted earlier, Mountview Estates pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. While shareholder returns are acceptable, they don't delight. So you can understand why we do not think CEO compensation is particularly modest!
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Mountview Estates that investors should look into moving forward.
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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About LSE:MTVW
Mountview Estates
Engages in the property trading and investment business in the United Kingdom.
Adequate balance sheet average dividend payer.
