Increases to CEO Compensation Might Be Put On Hold For Now at Ackroo Inc. (CVE:AKR)

Ackroo Inc. (CVE:AKR) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 01 September 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Ackroo

How Does Total Compensation For Steve Levely Compare With Other Companies In The Industry?

Our data indicates that Ackroo Inc. has a market capitalization of CA$19m, and total annual CEO compensation was reported as CA$302k for the year to December 2020. That's just a smallish increase of 5.2% on last year. Notably, the salary which is CA$180.0k, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below CA$253m, reported a median total CEO compensation of CA$194k. Accordingly, our analysis reveals that Ackroo Inc. pays Steve Levely north of the industry median. Moreover, Steve Levely also holds CA$748k worth of Ackroo stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	CA$180k	CA$180k	60%
Other	CA$122k	CA$108k	40%
Total Compensation	CA$302k	CA$288k	100%

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. Ackroo sets aside a smaller share of compensation for salary, in comparison to the overall 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 Ackroo Inc.'s Growth Numbers

Ackroo Inc. has reduced its earnings per share by 7.2% a year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Ackroo Inc. Been A Good Investment?

Most shareholders would probably be pleased with Ackroo Inc. for providing a total return of 62% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for Ackroo (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Ackroo 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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