Despite positive share price growth of 19% for Van Lanschot Kempen N.V. (AMS:VLK) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 27 May 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
How Does Total Compensation For Karl Guha Compare With Other Companies In The Industry?
According to our data, Van Lanschot Kempen N.V. has a market capitalization of €958m, and paid its CEO total annual compensation worth €1.5m over the year to December 2020. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at €730k.
In comparison with other companies in the industry with market capitalizations ranging from €328m to €1.3b, the reported median CEO total compensation was €474k. This suggests that Karl Guha is paid more than the median for the industry. Moreover, Karl Guha also holds €2.0m worth of Van Lanschot Kempen stock directly under their own name.
Speaking on an industry level, nearly 75% of total compensation represents salary, while the remainder of 25% is other remuneration. Van Lanschot Kempen sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Van Lanschot Kempen N.V.'s Growth
Over the last three years, Van Lanschot Kempen N.V. has shrunk its earnings per share by 18% per year. In the last year, its revenue is down 22%.
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. 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 Van Lanschot Kempen N.V. Been A Good Investment?
Van Lanschot Kempen N.V. has generated a total shareholder return of 19% over three years, so most shareholders would 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.
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.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Van Lanschot Kempen that investors should look into moving forward.
Important note: Van Lanschot Kempen 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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