Palace Capital Plc's (LON:PCA) CEO Might Not Expect Shareholders To Be So Generous This Year

Shareholders will probably not be too impressed with the underwhelming results at Palace Capital Plc (LON:PCA) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29 July 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Palace Capital

Comparing Palace Capital Plc's CEO Compensation With the industry

Our data indicates that Palace Capital Plc has a market capitalization of UK£122m, and total annual CEO compensation was reported as UK£425k for the year to March 2021. We note that's a decrease of 29% compared to last year. We note that the salary portion, which stands at UK£303.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between UK£73m and UK£291m had a median total CEO compensation of UK£520k. From this we gather that Ronald Sinclair is paid around the median for CEOs in the industry. Moreover, Ronald Sinclair also holds UK£690k worth of Palace Capital stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	UK£303k	UK£295k	71%
Other	UK£122k	UK£303k	29%
Total Compensation	UK£425k	UK£598k	100%

On an industry level, roughly 53% of total compensation represents salary and 47% is other remuneration. Palace Capital is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Palace Capital Plc's Growth

Over the last three years, Palace Capital Plc has shrunk its earnings per share by 117% per year. Its revenue is down 18% over the previous 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Palace Capital Plc Been A Good Investment?

Since shareholders would have lost about 11% over three years, some Palace Capital Plc investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Palace Capital (1 is a bit concerning!) that you should be aware of before investing here.

Switching gears from Palace Capital, 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. 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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