Tom Cross became the CEO of The Parkmead Group plc (LON:PMG) in 2011, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing The Parkmead Group plc's CEO Compensation With the industry
According to our data, The Parkmead Group plc has a market capitalization of UK£42m, and paid its CEO total annual compensation worth UK£509k over the year to June 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of UK£506.0k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under UK£143m, the reported median total CEO compensation was UK£271k. Accordingly, our analysis reveals that The Parkmead Group plc pays Tom Cross north of the industry median. What's more, Tom Cross holds UK£10m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Investors will find it interesting that Parkmead Group pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at The Parkmead Group plc's Growth Numbers
The Parkmead Group plc's earnings per share (EPS) grew 76% per year over the last three years. Its revenue is down 51% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 The Parkmead Group plc Been A Good Investment?
With a three year total loss of 8.2% for the shareholders, The Parkmead Group plc would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
Parkmead Group pays its CEO a majority of compensation through a salary. As we noted earlier, Parkmead Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Tom is underpaid, in fact compensation is definitely on the higher side.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Parkmead Group that investors should look into moving forward.
Switching gears from Parkmead Group, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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