In the past three years, the share price of Westminster Group PLC (LON:WSG) has struggled to grow and now shareholders are sitting on a loss. 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 24 June 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Comparing Westminster Group PLC's CEO Compensation With the industry
At the time of writing, our data shows that Westminster Group PLC has a market capitalization of UK£16m, and reported total annual CEO compensation of UK£196k for the year to December 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at UK£157.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under UK£144m, the reported median total CEO compensation was UK£196k. From this we gather that Peter Fowler is paid around the median for CEOs in the industry. Furthermore, Peter Fowler directly owns UK£364k worth of shares in the company.
Speaking on an industry level, nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. According to our research, Westminster Group has allocated a higher percentage of pay to salary in comparison to the wider industry. 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 Westminster Group PLC's Growth Numbers
Westminster Group PLC's earnings per share (EPS) grew 60% per year over the last three years. In the last year, its revenue is down 8.7%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Westminster Group PLC Been A Good Investment?
Few Westminster Group PLC shareholders would feel satisfied with the return of -52% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. 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.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Westminster Group (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Westminster 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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