Stock Analysis

A Quick Analysis On Precinct Properties New Zealand's (NZSE:PCT) CEO Salary

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NZSE:PCT
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This article will reflect on the compensation paid to Scott Pritchard who has served as CEO of Precinct Properties New Zealand Limited (NZSE:PCT) since 2010. This analysis will also look to assess whether the CEO is appropriately paid, considering recent funds from operations growth and investor returns for Precinct Properties New Zealand.

View our latest analysis for Precinct Properties New Zealand

How Does Total Compensation For Scott Pritchard Compare With Other Companies In The Industry?

At the time of writing, our data shows that Precinct Properties New Zealand Limited has a market capitalization of NZ$2.1b, and reported total annual CEO compensation of NZ$1.8m for the year to June 2020. That's a modest increase of 3.6% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at NZ$540k.

On comparing similar companies from the same industry with market caps ranging from NZ$1.4b to NZ$4.4b, we found that the median CEO total compensation was NZ$1.6m. This suggests that Precinct Properties New Zealand remunerates its CEO largely in line with the industry average. Moreover, Scott Pritchard also holds NZ$2.3m worth of Precinct Properties New Zealand stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary NZ$540k NZ$540k 29%
Other NZ$1.3m NZ$1.2m 71%
Total CompensationNZ$1.8m NZ$1.8m100%

On an industry level, around 55% of total compensation represents salary and 45% is other remuneration. Precinct Properties New Zealand pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NZSE:PCT CEO Compensation March 2nd 2021

A Look at Precinct Properties New Zealand Limited's Growth Numbers

Precinct Properties New Zealand Limited has seen its funds from operations (FFO) increase by 3.8% per year over the past three years. Its revenue is up 15% over the last year.

This revenue growth could really point to a brighter future. And the improvement in FFOis modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. 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 Precinct Properties New Zealand Limited Been A Good Investment?

We think that the total shareholder return of 42%, over three years, would leave most Precinct Properties New Zealand Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As we touched on above, Precinct Properties New Zealand Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the company's FFO growth numbers over the last three years is not that impressive. At the same time, shareholder returns have remained strong over the same period. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before a bump in pay.

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. We did our research and identified 4 warning signs (and 2 which are concerning) in Precinct Properties New Zealand we think you should know about.

Important note: Precinct Properties New Zealand 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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