Shareholders May Not Be So Generous With Eckoh plc's (LON:ECK) CEO Compensation And Here's Why

Key Insights

• Eckoh's Annual General Meeting to take place on 13th of September
• Salary of UK£339.0k is part of CEO Nik Philpot's total remuneration
• Total compensation is 35% above industry average
• Over the past three years, Eckoh's EPS grew by 9.2% and over the past three years, the total loss to shareholders 21%

Shareholders of Eckoh plc (LON:ECK) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 13th of September. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Eckoh

How Does Total Compensation For Nik Philpot Compare With Other Companies In The Industry?

At the time of writing, our data shows that Eckoh plc has a market capitalization of UK£130m, and reported total annual CEO compensation of UK£453k for the year to March 2023. That's a notable increase of 16% on last year. Notably, the salary which is UK£339.0k, represents most of the total compensation being paid.

In comparison with other companies in the British IT industry with market capitalizations ranging from UK£80m to UK£320m, the reported median CEO total compensation was UK£335k. Accordingly, our analysis reveals that Eckoh plc pays Nik Philpot north of the industry median. Furthermore, Nik Philpot directly owns UK£3.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	UK£339k	UK£326k	75%
Other	UK£114k	UK£65k	25%
Total Compensation	UK£453k	UK£391k	100%

Talking in terms of the industry, salary represented approximately 75% of total compensation out of all the companies we analyzed, while other remuneration made up 25% of the pie. Eckoh is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Eckoh plc's Growth Numbers

Over the past three years, Eckoh plc has seen its earnings per share (EPS) grow by 9.2% per year. Its revenue is up 22% over the last year.

We would argue that the modest growth in revenue is a notable positive. And, while modest, the EPS growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 Eckoh plc Been A Good Investment?

Given the total shareholder loss of 21% over three years, many shareholders in Eckoh plc are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Eckoh.

Switching gears from Eckoh, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.