Here's Why Shareholders May Want To Be Cautious With Increasing Huddled Group Plc's (LON:HUD) CEO Pay Packet

Key Insights

• Huddled Group will host its Annual General Meeting on 25th of June
• CEO Martin Higginson's total compensation includes salary of UK£183.2k
• Total compensation is similar to the industry average
• Huddled Group's three-year loss to shareholders was 39% while its EPS grew by 26% over the past three years

The underwhelming share price performance of Huddled Group Plc (LON:HUD) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 25th of June could be an opportunity for shareholders to bring these concerns to the board's attention. 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 Huddled Group

How Does Total Compensation For Martin Higginson Compare With Other Companies In The Industry?

Our data indicates that Huddled Group Plc has a market capitalization of UK£9.9m, and total annual CEO compensation was reported as UK£219k for the year to December 2023. We note that's a decrease of 32% compared to last year. In particular, the salary of UK£183.2k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the British Entertainment industry with market capitalizations below UK£157m, we found that the median total CEO compensation was UK£231k. So it looks like Huddled Group compensates Martin Higginson in line with the median for the industry. Moreover, Martin Higginson also holds UK£1.3m worth of Huddled Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	UK£183k	UK£189k	84%
Other	UK£36k	UK£135k	16%
Total Compensation	UK£219k	UK£324k	100%

Speaking on an industry level, nearly 72% of total compensation represents salary, while the remainder of 28% is other remuneration. According to our research, Huddled Group has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Huddled Group Plc's Growth

Huddled Group Plc's earnings per share (EPS) grew 26% per year over the last three years. It achieved revenue growth of 204% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Huddled Group Plc Been A Good Investment?

The return of -39% over three years would not have pleased Huddled Group Plc shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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. At 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 will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Huddled Group (1 is potentially serious!) that you should be aware of before investing here.

Important note: Huddled Group 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