Michael Weinstein became the CEO of Ark Restaurants Corp. (NASDAQ:ARKR) in 1983, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Ark Restaurants pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Ark Restaurants
Comparing Ark Restaurants Corp.'s CEO Compensation With the industry
Our data indicates that Ark Restaurants Corp. has a market capitalization of US$68m, and total annual CEO compensation was reported as US$837k for the year to October 2020. Notably, that's a decrease of 27% over the year before. Notably, the salary which is US$726.7k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$421k. This suggests that Michael Weinstein is paid more than the median for the industry. Moreover, Michael Weinstein also holds US$18m worth of Ark Restaurants 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 | US$727k | US$1.1m | 87% |
| Other | US$110k | US$90k | 13% |
| Total Compensation | US$837k | US$1.1m | 100% |
Speaking on an industry level, nearly 25% of total compensation represents salary, while the remainder of 75% is other remuneration. Ark Restaurants pays out 87% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Ark Restaurants Corp.'s Growth
Over the last three years, Ark Restaurants Corp. has shrunk its earnings per share by 78% per year. It saw its revenue drop 50% over the last year.
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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Ark Restaurants Corp. Been A Good Investment?
Given the total shareholder loss of 15% 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...
As previously discussed, Michael is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Ark Restaurants (2 shouldn't be ignored!) that you should be aware of before investing here.
Important note: Ark Restaurants 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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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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About NasdaqGM:ARKR
Ark Restaurants
Through its subsidiaries, owns and operates restaurants and bars in the United States.
Adequate balance sheet second-rate dividend payer.
