Here's Why We Think Microsaic Systems plc's (LON:MSYS) CEO Compensation Looks Fair

Performance at Microsaic Systems plc (LON:MSYS) has been rather uninspiring recently and shareholders may be wondering how CEO Glenn Tracey plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 17 June 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Microsaic Systems

How Does Total Compensation For Glenn Tracey Compare With Other Companies In The Industry?

Our data indicates that Microsaic Systems plc has a market capitalization of UK£14m, and total annual CEO compensation was reported as UK£135k for the year to December 2020. That's a notable decrease of 12% on last year. In particular, the salary of UK£113.8k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under UK£141m, the reported median total CEO compensation was UK£196k. In other words, Microsaic Systems pays its CEO lower than the industry median.

Component	2020	2019	Proportion (2020)
Salary	UK£114k	UK£134k	84%
Other	UK£21k	UK£21k	16%
Total Compensation	UK£135k	UK£154k	100%

Talking in terms of the industry, salary represented approximately 67% of total compensation out of all the companies we analyzed, while other remuneration made up 33% of the pie. Microsaic Systems is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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 Microsaic Systems plc's Growth Numbers

Microsaic Systems plc's earnings per share (EPS) grew 40% per year over the last three years. In the last year, its revenue is down 77%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Microsaic Systems plc Been A Good Investment?

Few Microsaic Systems plc shareholders would feel satisfied with the return of -89% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Microsaic Systems you should be aware of, and 3 of them are concerning.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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