Stock Analysis

We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Precinct Properties New Zealand Limited's (NZSE:PCT) CEO For Now

  •  Updated
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CEO Scott Pritchard has done a decent job of delivering relatively good performance at Precinct Properties New Zealand Limited (NZSE:PCT) recently. As shareholders go into the upcoming AGM on 03 November 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Precinct Properties New Zealand

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

According to our data, Precinct Properties New Zealand Limited has a market capitalization of NZ$2.6b, and paid its CEO total annual compensation worth NZ$2.6m over the year to June 2021. Notably, that's an increase of 42% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at NZ$620k.

On examining similar-sized companies in the industry with market capitalizations between NZ$1.4b and NZ$4.4b, we discovered that the median CEO total compensation of that group was NZ$1.5m. Accordingly, our analysis reveals that Precinct Properties New Zealand Limited pays Scott Pritchard north of the industry median. Moreover, Scott Pritchard also holds NZ$810k worth of Precinct Properties New Zealand stock directly under their own name.

Component20212020Proportion (2021)
Salary NZ$620k NZ$540k 24%
Other NZ$2.0m NZ$1.3m 76%
Total CompensationNZ$2.6m NZ$1.8m100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. In Precinct Properties New Zealand's case, non-salary compensation represents a greater slice of total remuneration, 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.

NZSE:PCT CEO Compensation October 28th 2021

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

Over the past three years, Precinct Properties New Zealand Limited has seen its funds from operations (FFO) grow by 5.0% per year. Its revenue is up 32% over the last year.

It's great to see that revenue growth is strong. With that in mind, the modestly improving FFO seems positive. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! 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 Precinct Properties New Zealand Limited Been A Good Investment?

Precinct Properties New Zealand Limited has generated a total shareholder return of 31% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

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 identified 4 warning signs for Precinct Properties New Zealand (1 is a bit unpleasant!) that you should be aware of before investing here.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Precinct Properties New Zealand is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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