It Looks Like Synectics plc's (LON:SNX) CEO May Expect Their Salary To Be Put Under The Microscope

Shareholders will probably not be too impressed with the underwhelming results at Synectics plc (LON:SNX) recently. At the upcoming AGM on 27 April 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.

View our latest analysis for Synectics

How Does Total Compensation For Paul Webb Compare With Other Companies In The Industry?

At the time of writing, our data shows that Synectics plc has a market capitalization of UK£24m, and reported total annual CEO compensation of UK£274k for the year to November 2020. Notably, that's a decrease of 21% over the year before. In particular, the salary of UK£244.0k, 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£143m, the reported median total CEO compensation was UK£207k. Hence, we can conclude that Paul Webb is remunerated higher than the industry median. Moreover, Paul Webb also holds UK£83k worth of Synectics stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	UK£244k	UK£242k	89%
Other	UK£30k	UK£105k	11%
Total Compensation	UK£274k	UK£347k	100%

On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. Synectics is paying a higher share of its remuneration through a salary in comparison to the overall 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 Synectics plc's Growth Numbers

Over the last three years, Synectics plc has shrunk its earnings per share by 95% per year. Its revenue is down 35% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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 Synectics plc Been A Good Investment?

With a three year total loss of 20% for the shareholders, Synectics plc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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, 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 Synectics (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Switching gears from Synectics, 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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