Shareholders Will Probably Hold Off On Increasing NetScientific plc's (LON:NSCI) CEO Compensation For The Time Being

Key Insights

• NetScientific will host its Annual General Meeting on 10th of July
• CEO Ilian Iliev's total compensation includes salary of UK£276.0k
• The total compensation is 49% higher than the average for the industry
• Over the past three years, NetScientific's EPS fell by 3.0% and over the past three years, the total loss to shareholders 39%

In the past three years, the share price of NetScientific plc (LON:NSCI) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also poor, despite revenues growing. Shareholders will have a chance to take their concerns to the board at the next AGM on 10th of July and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for NetScientific

How Does Total Compensation For Ilian Iliev Compare With Other Companies In The Industry?

Our data indicates that NetScientific plc has a market capitalization of UK£17m, and total annual CEO compensation was reported as UK£425k for the year to December 2023. We note that's a small decrease of 4.5% on last year. Notably, the salary which is UK£276.0k, represents most of the total compensation being paid.

In comparison with other companies in the British Medical Equipment industry with market capitalizations under UK£158m, the reported median total CEO compensation was UK£286k. Accordingly, our analysis reveals that NetScientific plc pays Ilian Iliev north of the industry median. What's more, Ilian Iliev holds UK£2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	UK£276k	UK£263k	65%
Other	UK£149k	UK£182k	35%
Total Compensation	UK£425k	UK£445k	100%

Talking in terms of the industry, salary represented approximately 74% of total compensation out of all the companies we analyzed, while other remuneration made up 26% of the pie. In NetScientific's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

NetScientific plc's Growth

NetScientific plc has reduced its earnings per share by 3.0% a year over the last three years. In the last year, its revenue is up 44%.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 NetScientific plc Been A Good Investment?

Few NetScientific plc shareholders would feel satisfied with the return of -39% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for NetScientific (1 is potentially serious!) that you should be aware of before investing here.

Important note: NetScientific 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com