Shareholders May Be A Bit More Conservative With Westminster Group PLC's (LON:WSG) CEO Compensation For Now

In the past three years, the share price of Westminster Group PLC (LON:WSG) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 24 June 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Westminster Group

Comparing Westminster Group PLC's CEO Compensation With the industry

At the time of writing, our data shows that Westminster Group PLC has a market capitalization of UK£16m, and reported total annual CEO compensation of UK£196k for the year to December 2020. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at UK£157.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below UK£144m, reported a median total CEO compensation of UK£196k. From this we gather that Peter Fowler is paid around the median for CEOs in the industry. Moreover, Peter Fowler also holds UK£364k worth of Westminster Group stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	UK£157k	UK£157k	80%
Other	UK£39k	UK£44k	20%
Total Compensation	UK£196k	UK£201k	100%

Speaking on an industry level, nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. It's interesting to note that Westminster Group pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Westminster Group PLC's Growth

Westminster Group PLC's earnings per share (EPS) grew 60% per year over the last three years. In the last year, its revenue is down 8.7%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Westminster Group PLC Been A Good Investment?

The return of -52% over three years would not have pleased Westminster Group PLC shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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. That's why we did our research, and identified 4 warning signs for Westminster Group (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Westminster Group 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. 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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