Here's Why It's Unlikely That Shoe Zone plc's (LON:SHOE) CEO Will See A Pay Rise This Year

Shareholders will probably not be too impressed with the underwhelming results at Shoe Zone plc (LON:SHOE) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 08 March 2022. 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.

See our latest analysis for Shoe Zone

Comparing Shoe Zone plc's CEO Compensation With the industry

At the time of writing, our data shows that Shoe Zone plc has a market capitalization of UK£71m, and reported total annual CEO compensation of UK£561k for the year to October 2021. That's a notable increase of 43% on last year. In particular, the salary of UK£350.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under UK£150m, the reported median total CEO compensation was UK£394k. Hence, we can conclude that Anthony Edward Smith is remunerated higher than the industry median. What's more, Anthony Edward Smith holds UK£21m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	UK£350k	UK£350k	62%
Other	UK£211k	UK£43k	38%
Total Compensation	UK£561k	UK£393k	100%

Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. According to our research, Shoe Zone has allocated a higher percentage of pay to salary in comparison to the wider industry. 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 Shoe Zone plc's Growth Numbers

Over the last three years, Shoe Zone plc has shrunk its earnings per share by 9.7% per year. Its revenue is down 2.9% over the previous 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. 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 Shoe Zone plc Been A Good Investment?

Given the total shareholder loss of 29% over three years, many shareholders in Shoe Zone plc are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Shoe Zone you should be aware of, and 1 of them makes us a bit uncomfortable.

Important note: Shoe Zone 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.