Ark Restaurants Corp.'s (NASDAQ:ARKR) CEO Might Not Expect Shareholders To Be So Generous This Year

Shareholders will probably not be too impressed with the underwhelming results at Ark Restaurants Corp. (NASDAQ:ARKR) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 16 March 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Ark Restaurants

Comparing Ark Restaurants Corp.'s CEO Compensation With the industry

At the time of writing, our data shows that Ark Restaurants Corp. has a market capitalization of US$65m, and reported total annual CEO compensation of US$837k for the year to October 2020. We note that's a decrease of 27% compared to last year. We note that the salary portion, which stands at US$726.7k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$421k. Accordingly, our analysis reveals that Ark Restaurants Corp. pays Michael Weinstein north of the industry median. Furthermore, Michael Weinstein directly owns US$17m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$727k	US$1.1m	87%
Other	US$110k	US$90k	13%
Total Compensation	US$837k	US$1.1m	100%

On an industry level, around 25% of total compensation represents salary and 75% is other remuneration. Ark Restaurants pays out 87% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Ark Restaurants Corp.'s Growth

Ark Restaurants Corp. has reduced its earnings per share by 78% a year over the last three years. Its revenue is down 50% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ark Restaurants Corp. Been A Good Investment?

Given the total shareholder loss of 18% over three years, many shareholders in Ark Restaurants Corp. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Ark Restaurants (2 are concerning!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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