Stock Analysis

Here's What We Think About Town Centre Securities' (LON:TOWN) CEO Pay

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Edward Ziff has been the CEO of Town Centre Securities PLC (LON:TOWN) since 2001, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Town Centre Securities.

Note: The company does not report funds from operations, and as a result, we have used earnings per share in our analysis.

See our latest analysis for Town Centre Securities

Comparing Town Centre Securities PLC's CEO Compensation With the industry

At the time of writing, our data shows that Town Centre Securities PLC has a market capitalization of UK£58m, and reported total annual CEO compensation of UK£674k for the year to June 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of UK£600.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below UK£152m, reported a median total CEO compensation of UK£260k. Accordingly, our analysis reveals that Town Centre Securities PLC pays Edward Ziff north of the industry median. What's more, Edward Ziff holds UK£6.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary UK£600k UK£610k 89%
Other UK£74k UK£74k 11%
Total CompensationUK£674k UK£684k100%

On an industry level, roughly 36% of total compensation represents salary and 64% is other remuneration. Town Centre Securities pays out 89% 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.

LSE:TOWN CEO Compensation November 17th 2020

Town Centre Securities PLC's Growth

Over the last three years, Town Centre Securities PLC has shrunk its earnings per share by 104% per year. Its revenue is down 11% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Town Centre Securities PLC Been A Good Investment?

With a three year total loss of 58% for the shareholders, Town Centre Securities PLC would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Town Centre Securities pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Town Centre Securities (2 make us uncomfortable!) that you should be aware of before investing here.

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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