Should shareholders reconsider McKay Securities Plc’s (LON: MCKS) CEO compensation package?

The results at McKay Securities Plc (LON: MCKS) have been quite disappointing lately and CEO Simon Perkins bears some responsibility for that. The shareholders will be interested in what the Executive Board has to say about the turnaround at the next Annual General Meeting on July 1, 2021. You will also be given the opportunity to influence management decision-making by voting on decisions such as executive compensation that may affect the company’s value in the future. The data presented below explains why we believe the CEO’s compensation is inconsistent with recent performance.

Check out our latest analysis for McKay Securities

McKay Securities Plc’s CEO compensation compared to the industry

At the time of writing, our data shows McKay Securities Plc has a market capitalization of £ 211m and reported total CEO compensation of £ 703,000 for the year ended March 2021. That’s a remarkable 21% drop from last year. It is noteworthy that the salary of 403.0 thousand GBP makes up a considerable part of the total compensation.

For comparison, other companies in the same industry with market capitalizations between £ 72m and UK 286m had an average total CEO compensation of £ 481,000. Accordingly, our analysis shows that McKay Securities Plc is paying Simon Perkins north of the industry average. In addition, Simon Perkins also owns shares of McKay Securities valued at £ 791,000 directly under his own name.

At the industry level, around 42% of total compensation is salary and 58% is other compensation. According to our research, McKay Securities assigned a higher percentage of salaries to salary compared to the broader industry. If the total compensation approaches the salary, this indicates that the variable, usually performance-related component is lower.

The growth of McKay Securities Plc

McKay Securities Plc has reduced its earnings per share by 107% per year over the past three years. Last year sales fell by 2.1%.

The story goes on

The drop in EPS is somewhat worrying. In addition, there is the fact that sales are actually declining compared to the previous year. Given this relatively poor performance, shareholders probably wouldn’t want to see high compensation for the CEO. When looking ahead, you might want to check this free visual report over Analyst Forecasts for the future earnings of the company..

Was McKay Securities Plc a Good Investment?

With an overall stockholder loss of 0.4% over three years, many McKay Securities Plc shareholders are likely to be unhappy, to say the least. Hence, shareholders would likely want the company to be less generous with CEO salaries.

Conclude…

Coupled with poor business performance, shareholders have suffered from poor stock price returns on their investments, suggesting that there is little to no chance they will advocate a raise for the CEO. At the upcoming annual general meeting, the board of directors will have the opportunity to explain the planned steps to improve the company’s performance.

We can learn a lot about a company by studying CEO compensation trends and looking at other aspects of the business. We have identified 2 warning signs for McKay Securities (1 is a little bit worrisome!) To consider before investing here.

Important NOTE: McKay Securities is an exciting stock, but we understand investors are looking for an unencumbered balance sheet and blockbuster returns. Maybe you will find something better in the this list of interesting companies with high ROE and low debt.

This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell stocks and does not take into account your goals or financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.

Do you have any feedback on this article? Concerned about the content? Get in touch directly with us. Alternatively, send an email to the editorial team (at) simplywallst.com.