We Think Some Shareholders May Hesitate To Increase 9 Spokes International Limited's (ASX:9SP) CEO Compensation

In the past three years, the share price of 9 Spokes International Limited (ASX:9SP) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 15 July 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for 9 Spokes International

How Does Total Compensation For Adrian Grant Compare With Other Companies In The Industry?

According to our data, 9 Spokes International Limited has a market capitalization of AU$25m, and paid its CEO total annual compensation worth NZ$527k over the year to March 2021. That's a notable increase of 59% on last year. We note that the salary portion, which stands at NZ$420.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$268m, reported a median total CEO compensation of NZ$387k. This suggests that Adrian Grant is paid more than the median for the industry. Moreover, Adrian Grant also holds AU$1.1m worth of 9 Spokes International stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	NZ$420k	NZ$332k	80%
Other	NZ$107k	-	20%
Total Compensation	NZ$527k	NZ$332k	100%

Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. 9 Spokes International pays out 80% 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 9 Spokes International Limited's Growth Numbers

9 Spokes International Limited's earnings per share (EPS) grew 78% per year over the last three years. It saw its revenue drop 2.6% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 9 Spokes International Limited Been A Good Investment?

With a total shareholder return of -41% over three years, 9 Spokes International Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for 9 Spokes International that investors should think about before committing capital to this stock.

Important note: 9 Spokes International 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. 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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