Shareholders May Not Be So Generous With Ark Restaurants Corp.'s (NASDAQ:ARKR) CEO Compensation And Here's Why

In the past three years, shareholders of Ark Restaurants Corp. (NASDAQ:ARKR) have seen a loss on their investment. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 15 March 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Ark Restaurants

How Does Total Compensation For Michael Weinstein Compare With Other Companies In The Industry?

Our data indicates that Ark Restaurants Corp. has a market capitalization of US$63m, and total annual CEO compensation was reported as US$869k for the year to October 2021. That's a fairly small increase of 3.9% over the previous year. We note that the salary portion, which stands at US$819.0k 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$683k. From this we gather that Michael Weinstein is paid around the median for CEOs in the industry. 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	2021	2020	Proportion (2021)
Salary	US$819k	US$727k	94%
Other	US$50k	US$110k	6%
Total Compensation	US$869k	US$837k	100%

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. Ark Restaurants pays out 94% 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.

A Look at Ark Restaurants Corp.'s Growth Numbers

Ark Restaurants Corp. has seen its earnings per share (EPS) increase by 73% a year over the past three years. Its revenue is up 86% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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?

With a three year total loss of 9.6% for the shareholders, Ark Restaurants Corp. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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 3 warning signs for Ark Restaurants (1 is a bit unpleasant!) 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.