Increases to CEO Compensation Might Be Put On Hold For Now at Clarkson PLC (LON:CKN)

Despite Clarkson PLC's (LON:CKN) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 05 May 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Clarkson

Comparing Clarkson PLC's CEO Compensation With the industry

According to our data, Clarkson PLC has a market capitalization of UK£892m, and paid its CEO total annual compensation worth UK£3.2m over the year to December 2020. That's a slight decrease of 3.5% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£550k.

On examining similar-sized companies in the industry with market capitalizations between UK£718m and UK£2.3b, we discovered that the median CEO total compensation of that group was UK£1.3m. Accordingly, our analysis reveals that Clarkson PLC pays Andi Case north of the industry median. Moreover, Andi Case also holds UK£15m worth of Clarkson stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	UK£550k	UK£550k	17%
Other	UK£2.6m	UK£2.7m	83%
Total Compensation	UK£3.2m	UK£3.3m	100%

Talking in terms of the industry, salary represented approximately 57% of total compensation out of all the companies we analyzed, while other remuneration made up 43% of the pie. It's interesting to note that Clarkson allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Clarkson PLC's Growth Numbers

Over the last three years, Clarkson PLC has shrunk its earnings per share by 94% per year. It saw its revenue drop 1.3% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Clarkson PLC Been A Good Investment?

With a total shareholder return of 33% over three years, Clarkson PLC shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Clarkson that you should be aware of before investing.

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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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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