Shareholders May Find It Hard To Justify Increasing Location Sciences Group PLC's (LON:LSAI) CEO Compensation For Now

The underwhelming share price performance of Location Sciences Group PLC (LON:LSAI) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 18 June 2021 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.

Check out our latest analysis for Location Sciences Group

Comparing Location Sciences Group PLC's CEO Compensation With the industry

At the time of writing, our data shows that Location Sciences Group PLC has a market capitalization of UK£21m, and reported total annual CEO compensation of UK£175k for the year to December 2020. That's just a smallish increase of 4.6% on last year. Notably, the salary which is UK£156.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below UK£141m, we found that the median total CEO compensation was UK£249k. So it looks like Location Sciences Group compensates Mark Slade in line with the median for the industry. Furthermore, Mark Slade directly owns UK£48k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	UK£156k	UK£150k	89%
Other	UK£19k	UK£17k	11%
Total Compensation	UK£175k	UK£167k	100%

Talking in terms of the industry, salary represented approximately 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. Location Sciences Group pays out 89% 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 Location Sciences Group PLC's Growth Numbers

Over the past three years, Location Sciences Group PLC has seen its earnings per share (EPS) grow by 94% per year. Its revenue is down 10% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Location Sciences Group PLC Been A Good Investment?

The return of -74% over three years would not have pleased Location Sciences 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. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for Location Sciences Group (1 is significant!) that you should be aware of before investing here.

Switching gears from Location Sciences Group, 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. 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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