Innes Smith became the CEO of Springfield Properties Plc (LON:SPR) in 2012, 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 Springfield Properties pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Springfield Properties Plc's CEO Compensation With the industry
According to our data, Springfield Properties Plc has a market capitalization of UK£92m, and paid its CEO total annual compensation worth UK£247k over the year to May 2020. That's a notable decrease of 31% on last year. We note that the salary portion, which stands at UK£218.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under UK£153m, the reported median total CEO compensation was UK£301k. From this we gather that Innes Smith is paid around the median for CEOs in the industry. Moreover, Innes Smith also holds UK£895k worth of Springfield Properties stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 44% of total compensation represents salary, while the remainder of 56% is other remuneration. According to our research, Springfield Properties 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 Springfield Properties Plc's Growth Numbers
Over the last three years, Springfield Properties Plc has shrunk its earnings per share by 4.9% per year. Its revenue is down 24% over the previous year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Springfield Properties Plc Been A Good Investment?
Since shareholders would have lost about 14% over three years, some Springfield Properties Plc investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Springfield Properties Plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
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. That's why we did our research, and identified 3 warning signs for Springfield Properties (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
Important note: Springfield Properties 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.
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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